Brookfield is making its largest-ever real estate bet with a $14.8 billion offer to buy the remaining shares of one of America’s biggest real estate investment trusts, the mall giant GGP.
PERE understands that if the bid, submitted this week, is accepted, the Toronto-based asset manager would likely syndicate the acquisition to third-party investors, as it has done with other large-scale transactions. Brookfield has used the tactic in deals ranging from European and Asian mixed-use projects to its opening investment into GGP itself, farming out its 2013 stock purchase to multiple sovereign wealth funds.
Scanning Brookfield’s past roster of syndication partners gives an indicator as to where the appetite could be for a bite of GGP once it has been acquired. PERE gauges who may take a chunk of the deal:
– China Investment Corporation: very likely. The sovereign wealth fund participated in Brookfield’s original GGP syndication and has continued partnering with the firm on others. Last year, CIC backed Brookfield’s $2.3 billion purchase of the International Finance Center Seoul. In addition, the fund is seeking to do more direct property deals from its New York City office, PERE reported in July. GGP could be a good entrance point to US retail if CIC has future ambitions to go it alone.
– Korea Investment Corporation: likely. The Korean sovereign wealth fund is familiar with Brookfield’s retail strategy through its 2016 co-investment in Berlin’s Potsdamer Platz, a mixed-use property that includes 493,000 square feet of retail. KIC told PERE in September that it typically invests $3 billion-$4 billion in real estate annually, more than enough capital to put to work in a slice of GGP.
– Future Fund: unlikely. Like CIC, the Australian sovereign wealth fund was part of the original GGP consortium and it continues to work with Brookfield. However, in its annual report, the investor expressed pessimism about investing in retail, and last year it continued to reduce exposure to the property type.
– Qatar Investment Authority: very unlikely. The sovereign wealth fund has been a Brookfield partner in the past, buying into New York City’s Manhattan West development and London’s Canary Wharf. However, in light of geopolitical concerns close to home, the QIA has largely disappeared from international property investing, with one broker telling PERE last month that investors instructed him not to present club deals involving the QIA. Given the ongoing Gulf diplomatic crisis, PERE is betting the QIA stays out of this deal.
– Public Investment Fund: dark-horse candidate. Saudi Arabia’s sovereign wealth fund has sizable real estate ambitions: it seeks to increase its assets under management to over $400 billion by 2020, up from $230 billion now, and has said some of its future investments will be in real estate. If PIF wants to establish itself quickly as a major real estate player, taking a major slice of the GGP deal would be a strong opening foray.
PS: A reminder that PERE award submissions close Tuesday, November 21. For more information and the submission link, click here.
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