Brookfield is offering to make Brookfield Property private for $ 5.9 billion

Brookfield Asset Management said Monday it had made an offer to take over its Brookfield Property Partners commercial real estate arm in a $ 5.9 billion deal.

The Canadian asset management firm is offering $ 16.50 for each Brookfield Property share it does not already own.

“Privatization will allow us to have more flexibility in operating the portfolio and achieving the intrinsic value of BPY’s high-quality assets,” said Nick Goodman, Brookfield Asset Management’s chief financial officer, Nick Goodman.

Brookfield Property has assets of approximately $ 88 billion, including office buildings, malls, self-storage facilities and logistics centers. Due to the effects of the Covid pandemic, the value of many of its properties has decreased. Commercial and retail spaces are seen as particularly risky bets, as vacancies increase and more people adapt to shopping and work from home.

On the Nasdaq, Brookfield Property shares fell about 20% from a year ago. The stock rose more than 15% in premarket trading on Monday, while Brookfield Asset Management shares remained unchanged.

In a separate press release, Brookfield Property said its council had set up an independent committee to review the proposal.

The $ 16.50 per unit price represents a premium of 14.9% and 14.0%, respectively, compared to the closing price of Brookfield Property shares on the Toronto Stock Exchange and the Nasdaq on December 31. Shareholders will be able to choose to receive $ 16.50 in cash for each Brookfield Property Unit, 0.40 Brookfield Class A shares or 0.66 of Brookfield Property’s preferred units with a liquidation preference of $ 25 per unit, Brookfield Asset Management said .

Brookfield Asset Management, which has assets under management of approximately $ 575 billion, said it does not propose to acquire other securities of Brookfield Property and its subsidiaries. They are expected to remain outstanding.