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Todd Sullivan
Todd Sullivan

Brookfield Responds to Pershing Square Regarding to General Growth Properties

August 23, 2012 | About:

Thoughts at the end…..

TORONTO, ONTARIO — (Marketwire) — 08/23/12 — Brookfield Asset Management Inc. (NYSE:BAM) notes a Schedule 13D filing with the SEC made today by Pershing Square which references a letter sent by it to the Board of Directors of General Growth Properties, Inc. (NYSE: GGP)(NYSE:GGP).

In response, Brookfield makes the following statements:

Brookfield is not taking any steps to acquire GGP nor is it having any discussions with third parties in that regard.

Brookfield has no interest in selling its stake in GGP. We are 100% supportive of the current management team of GGP and believe that GGP’s business plan has and will continue to create significant long term value for all stakeholders. When Brookfield was chosen as an investor in GGP, it was explicitly on the basis that we were a long term investor. We have invested considerable capital, time and attention to support management and the Board as they enhance the value of GGP for all concerned. The results to date bear testimony to their success.

Over the past 12 months, at the request of Pershing Square, Brookfield considered and discussed a variety of possible transactions which would facilitate Pershing Square’s desire to maximize the value of and create liquidity for its interest in GGP. These discussions are not continuing.

Brookfield has fully complied with all of the agreements put in place at the time of the recapitalization of GGP. All shares of GGP which we acquired are in accordance with those agreements and are a demonstration of our faith in the future of GGP. We own approximately 40% of GGP (on a fully diluted basis) with a value of over $8 billion. Brookfield is a proud shareholder of GGP and we intend to remain so over the long term.
Brookfield is not taking any steps to acquire GGP.……” um, but they are. By buying Fairholme’s stake and investing in a DRIP, they are in fact increasing their stake. If this continues, um….they’ll own it. One also has to consider BAM has substantial representation on GGP ‘s Board that is authorizing GGP to buy back shares and shrink the float. When they shrink the float they increase BAM’s ownership percentage using shareholder’s money rather than their own. They are in fact “taking steps” to acquire GGP, they are just doing it very slowly.

The rest is just gibberish about supporting management, complying with their terms in agreements etc…

The big line is they are not taking steps to acquire it………they most assuredly are..

About the author:

Todd Sullivan
Charlie Tian, Ph.D. - Founder of GuruFocus. You can now order his book Invest Like a Guru on Amazon.

Rating: 3.5/5 (11 votes)


Vgm - 5 years ago    Report SPAM
Todd - seems BAM is saying they don't want to sell their piece of GGP as much as they are not going to buy the rest. Bruce Flatt is a guy of great integrity. I may be naive here, but I'll be very surprised if he goes ahead and buys the lot or sells out, after such a clear and considered statement to the contrary.
Gopihoods - 5 years ago    Report SPAM
The point is they will be getting a majority control without doing anything over time based on the agreements(stock buybacks & dividend reinvestment). In a year or two, they will own more than 50% without investing any more money on their own.
Vgm - 5 years ago    Report SPAM
It's one thing to say they are incrementally increasing their stake and may eventually get above 50% ownership (I agree with that). But it's quite another matter to assert they are "most assuredly...taking steps to acquire it".

And there's no basis to claim that "The rest is just gibberish about supporting management...". Based on the well-known high integrity and quality of Brookfield and of Bruce Flatt in particular, that's an undeserved criticism.

Disclosure: no ownership of BAM or GGP.
AlbertaSunwapta - 5 years ago    Report SPAM
^ I believe vgm is substantively 'more correct' than Sullivan.

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