F-4/A 1 d567992df4a.htm AMENDMENT NO.1 TO FORM F-4 Amendment No.1 to Form F-4
Table of Contents

As filed with the Securities and Exchange Commission on June 11, 2018.

Registration Nos. 333-224593/224594

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Amendment No. 1

to the

FORM S-4 / F-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

GGP Inc.

Brookfield Property Partners L.P.

(Exact Name of each Registrant as Specified in its Charter)

 

 

 

Delaware

Bermuda

 

6798

6500

 

27-2963337

Not applicable

(State or other jurisdiction of

incorporation or organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification Number)

350 N. Orleans St., Suite 300, Chicago, Illinois 60654, (312) 960-5000

73 Front Street, 5th Floor, Hamilton, HM 12, Bermuda, +1 (441) 294-3309

(Address, including Zip Code, and Telephone Number, including Area Code, of each Registrant’s Principal Executive Offices)

 

 

 

Rosemary G. Feit

Executive Vice President and General Counsel

GGP Inc.

350 N. Orleans St., Suite 300

Chicago, Illinois 60654

(312) 960-5000

 

Bryan K. Davis

Chief Financial Officer

Brookfield Property Group LLC

Brookfield Place

250 Vesey Street, 15th Floor

New York, New York 10281

(212) 417-7000

(Name, Address, including Zip Code, and Telephone Number, including Area Code, of Agent for Service)

 

 

With copies to:

 

Joseph C. Shenker, Esq.
Robert W. Downes, Esq.
Brian E. Hamilton, Esq.
Sullivan & Cromwell LLP
125 Broad Street
New York, New York 10004
(212) 558-4000
  Alan Klein, Esq.
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, New York 10017
(212) 455-2000
  Michael J. Aiello, Esq.
Matthew J. Gilroy, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
(212) 310-8000
  Gilbert G. Menna, Esq.
Mark S. Opper, Esq.
David H. Roberts, Esq.
Goodwin Procter LLP
100 Northern Avenue
Boston, Massachusetts
02210
(617) 570-1000
  Karrin Powys-Lybbe, Esq.
Mile T. Kurta, Esq.
Torys LLP
1114 Avenue of the Americas
New York, New York 10036
(212) 880-6000

 

 

Approximate date of commencement of the proposed sale of the securities to the public:

As soon as practicable after this Registration Statement becomes effective and upon completion of the transactions described in the enclosed document.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, as amended, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer      Accelerated filer   
Non-accelerated filer   ☐  (Do not check if a smaller reporting company)    Smaller reporting company   
     Emerging growth company   

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  ☐

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)  ☐

* Explanatory Note—This registration statement comprises a filing on Form S-4 with respect to the securities of GGP Inc. and a filing on Form F-4 with respect to the securities of Brookfield Property Partners L.P.


Table of Contents

 

CALCULATION OF REGISTRATION FEE

 

 

Title of each class of
Securities to be Registered
  Amount to be
Registered
 

Proposed

Maximum

Offering Price

Per Share/Unit

 

Proposed

Maximum
Aggregate

Offering Price

  Amount of
Registration Fee (7)(8)

Brookfield Property REIT Inc.’s Class A Stock, par value $0.01 per share

  281,564,838 (1)   N/A   $3,942,755,974 (4)   $490,873.12

Brookfield Property REIT Inc.’s 6.375% Series A Preferred Stock

  10,000,000 (2)   N/A   $245,500,000 (5)   $30,564.75

Brookfield Property Partners L.P.’s limited partnership units

  281,564,838 (3)   N/A   $3,942,755,974 (6)   $490,873.12

 

 

 

(1) Represents the maximum number of shares of Brookfield Property REIT Inc.’s (the successor entity to GGP Inc. following the transactions described herein) class A stock, par value $0.01 per share, estimated to be issued upon GGP Inc.’s payment of the pre-closing dividend described herein. This number is based on the maximum number of shares of class A stock estimated to be issued to holders of record of GGP Inc.’s common stock, par value $0.01 per share, on the record date of the pre-closing dividend described herein (taking into consideration (i) the exercise of certain GGP Inc. equity awards, (ii) the full redemption of the series of preferred units of GGP Operating Partnership, LP (an operating partnership of GGP Inc., which we refer to as GGPOP) designated as 6.5% series D cumulative convertible preferred units and the series of preferred units of GGPOP designated as 7% series E cumulative convertible preferred units into common units of GGPOP, and (iii) the full redemption into GGP Inc.’s common stock of the common units of GGPOP that are redeemable into GGP Inc.’s common stock in connection with the transactions described herein) (not including shares of GGP Inc.’s common stock exchanged for shares of Brookfield Property REIT Inc.’s class B stock, but including (i) any options to purchase GGP Inc.’s common stock outstanding under any stock plan of GGP Inc., which we refer to as GGP options, and (ii) GGP Inc.’s common stock that is subject to vesting or forfeiture conditions (including GGP Inc.’s common stock that is subject to performance-based vesting or forfeiture conditions under any stock plan of GGP Inc.), which we refer to as GGP restricted stock).
(2) Represents the maximum number of shares of Brookfield Property REIT Inc.’s 6.375% series A cumulative perpetual preferred stock, par value $0.01 per share, estimated to be issued to holders of record of GGP Inc.’s preferred stock upon completion of the charter amendments described herein. This number is based on the number of shares of GGP Inc.’s 6.375% series A cumulative perpetual preferred stock, par value $0.01 per share, outstanding as of April 27, 2018, and the exchange of each such share for one (1) share of the new series A cumulative perpetual preferred stock, pursuant to the merger agreement.
(3) Represents the maximum number of Brookfield Property Partners L.P.’s limited partnership units estimated to be issued in connection with the BPY unit exchange, which is described below. In connection with the transactions described herein, holders of GGP Inc.’s common stock may elect to receive one BPY unit in exchange for each share of class A stock received in the pre-closing dividend described above in note (1), which we refer to as the BPY unit exchange. This number is based on the maximum number of shares of class A stock estimated to be issued to holders of record of GGP Inc.’s common stock on the record date of the pre-closing dividend as described in note (1).
(4) Estimated solely for the purpose of calculating the registration fee pursuant to the Securities Act of 1933, as amended, which we refer to as the Securities Act. As further described in this joint proxy statement/prospectus, holders of GGP Inc.’s common stock may elect to receive one BPY unit in exchange for each share of class A stock that they are entitled to receive in the pre-closing dividend described above in note (1). The proposed maximum aggregate offering price of class A stock was calculated in accordance with Rules 457(c) and 457(f) under the Securities Act as follows: (i) the product of (a) $19.84 (rounded up to the nearest cent), which is the average of the high and low prices per share of GGP Inc.’s common stock as reported on the NYSE on April 27, 2018, and (b) 660,886,432, which is the estimated maximum number of shares of GGP Inc.’s common stock (taking into consideration (x) the exercise of certain GGP Inc. equity awards, (y) the full redemption of the series of preferred units of GGPOP designated as 6.5% series D cumulative convertible preferred units and the series of preferred units of GGPOP designated as 7% series E cumulative convertible preferred units into common units of GGPOP, and (z) the full redemption into GGP Inc.’s common stock of the common units of GGPOP that are redeemable into GGP Inc.’s common stock in connection with the transactions described herein) and GGP restricted stock receiving class A stock issued as described above in note (1), plus (ii) the product of (a) $5.65 per share (which is equal to the difference between $23.50 and $17.85 (rounded up to the nearest cent), the weighted average exercise price of the GGP options), and (b) 14,295,427, which is the estimated number of shares of GGP Inc.’s common stock underlying the GGP options receiving class A stock issued as described above in note (1), minus (iii) $9,250,000,000, which is the total amount of cash consideration that would be paid pursuant to the merger agreement to holders eligible to receive class A stock as described above in note (1).
(5) Estimated solely for the purpose of calculating the registration fee pursuant to the Securities Act. The proposed maximum aggregate offering price of Brookfield Property REIT Inc.’s series A cumulative perpetual preferred stock was calculated in accordance with Rules 457(c) and 457(f) under the Securities Act as follows: the product of (i) $24.55 (rounded up to the nearest cent), which is the average of the high and low prices per share of GGP Inc.’s 6.375% series A cumulative perpetual preferred stock, par value $0.01 per share, as reported on the NYSE on April 27, 2018, and (ii) 10,000,000, which is the estimated maximum number of shares of Brookfield Property REIT Inc.’s series A preferred stock that may be issued as described above in note (2).
(6) Estimated solely for the purpose of calculating the registration fee pursuant to the Securities Act. In connection with the transactions described herein, holders of GGP Inc.’s common stock may elect to receive BPY units instead of class A stock in the BPY unit exchange. The proposed maximum aggregate offering price of class A stock was calculated in accordance with Rules 457(c) and 457(f) under the Securities Act as follows: (i) the product of (a) $19.84 (rounded up to the nearest cent), which is the average of the high and low prices per share of GGP Inc.’s common stock as reported on the NYSE on April 27, 2018, and (b) 660,886,432, which is the estimated maximum number of shares of GGP Inc.’s common stock (taking into consideration (x) the exercise of certain GGP Inc. equity awards, (y) the full redemption of the series of preferred units of GGPOP designated as 6.5% series D cumulative convertible preferred units and the series of preferred units of GGPOP designated as 7% series E cumulative convertible preferred units into common units of GGPOP, and (z) the full redemption into GGP Inc.’s common stock of the common units of GGPOP that are redeemable into GGP Inc.’s common stock in connection with the transactions described herein) and GGP restricted stock receiving class A stock issued as described above in note (1), plus (ii) the product of (a) $5.65 per share (which is equal to the difference between $23.50 and $17.85 (rounded up to the nearest cent), the weighted average exercise price of the GGP options), and (b) 14,295,427, which is the estimated number of shares of GGP Inc.’s common stock underlying the GGP options receiving class A stock issued as described above in note (1), minus (iii) $9,250,000,000, which is the total amount of cash consideration that would be paid pursuant to the merger agreement to holders eligible to receive class A stock as described above in note (1).
(7) Computed in accordance with Rule 457(f) under the Securities Act to be equal to 0.0001245 multiplied by the proposed maximum aggregate offering price. GGP Inc. is filing this joint proxy statement/prospectus on Form S-4 and will pay the registration fee for the registration of Brookfield Property REIT Inc.’s class A stock and Brookfield Property REIT Inc.’s 6.375% series A preferred stock. Brookfield Property Partners L.P. is filing this joint proxy statement /prospectus on Form F-4 and will pay the registration fee for the registration of Brookfield Property Partners L.P.’s limited partnership units.
(8) Previously paid in connection with the initial filing of these registration statements on May 2, 2018.

 

 

The Registrants hereby amend this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrants shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

 

 


Table of Contents

The information in this joint proxy statement/prospectus is not complete and may be changed. Registration statements relating to these securities have been filed with the U.S. Securities and Exchange Commission. The securities to be affected by this joint proxy statement/prospectus may not be sold nor may offers to buy be accepted prior to the time the registration statements become effective. This joint proxy statement/prospectus shall not constitute an offer to sell or solicitation of any offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

 

PRELIMINARY—SUBJECT TO COMPLETION—DATED JUNE 11, 2018

 

 

LOGO

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

Dear GGP Common Stockholders:

On March 26, 2018, GGP Inc., which we refer to as GGP, Brookfield Property Partners L.P., which we refer to as BPY and which, together with certain of BPY’s affiliates, holds approximately 34% of the outstanding shares of GGP common stock, which we refer to as GGP common stock, and Goldfinch Merger Sub Corp., an indirect, wholly owned subsidiary of BPY, which we refer to as Goldfinch, entered into an Agreement and Plan of Merger, which agreement, as amended from time to time in accordance with its terms, we refer to as the merger agreement, pursuant to which BPY has agreed to acquire GGP, through a series of transactions, resulting in a combined company that will be one of the world’s largest commercial real estate enterprises. We refer to the merger agreement and certain other transaction agreements contemplated by the merger agreement (as described in more detail in the attached joint proxy statement/prospectus) collectively as the Transaction Agreements and the series of transactions contemplated by the Transaction Agreements, including the merger agreement, the Transactions. We refer to holders of GGP common stock as GGP common stockholders.

Under the terms of the merger agreement and the other Transaction Agreements:

 

    GGP will, among other things, (i) amend and restate its certificate of incorporation, which we refer to as the charter amendments, to authorize the issuance of a new series of class A stock, class B stock and class C stock, which we refer to as class A stock, class B stock and class C stock, respectively, (ii) amend and restate its bylaws, which we refer to as the bylaws amendments, and (iii) cause the general partner of GGP Operating Partnership, LP, an operating partnership of GGP which we refer to as GGPOP, to amend and restate the agreement of limited partnership of GGPOP, which we refer to as the GGPOP partnership agreement.

 

    Following the charter amendments, shares of GGP common stock held by BPY and certain of BPY’s affiliates will be exchanged for class B stock pursuant to the class B exchange agreement, which exchange we refer to as the Brookfield affiliate exchange; and at the effective time of the Brookfield affiliate exchange, each share of GGP common stock held by subsidiaries of GGP will also be exchanged for one (1) share of class B stock.

 

    Following the Brookfield affiliate exchange and certain other transactions, including recapitalization or financing transactions as BPY may request between the date of the merger agreement and the closing of the Transactions, GGP will declare a special dividend payable to the remaining GGP common stockholders (i.e., holders of those shares of GGP common stock that are not exchanged in connection with the Brookfield affiliate exchange), which we refer to as the unaffiliated GGP common stockholders, as of the record date of the pre-closing dividend (not including holders of GGP common stock that are subject to vesting or forfeiture conditions, which we refer to as GGP restricted stock, but including deemed holders of GGP common stock in respect of any in-the-money options to purchase GGP common stock outstanding under any GGP stock plan that were granted prior to January 1, 2018, who we refer to as deemed stockholders), consisting of either cash or class A stock, at the election of such GGP common stockholders (with deemed stockholders being deemed to have elected cash) and subject to proration. We refer to such special dividend as the pre-closing dividend, the number of shares of GGP common stock that are entitled to the pre-closing dividend (which excludes shares of GGP restricted stock but includes deemed shares of GGP common stock in respect of in-the-money options as described herein) as the pre-closing dividend share number and the shares of GGP common stock held by the unaffiliated GGP common stockholders as target shares. For illustrative examples of the proration mechanism in the event of a stock election oversubscription or a cash election oversubscription, refer to the section entitled “The Merger Agreement—Structure and Timing of the Transactions—The Pre-Closing Dividend” beginning on page [—] of this joint proxy statement/prospectus. Unaffiliated GGP common stockholders who elect to receive the pre-closing dividend in the form of class A stock will also have the option to exchange all, but not less than all, shares of class A stock that such holder received or is entitled to receive as the pre-closing dividend for limited partnership units of BPY, which we refer to as BPY units. We refer to such exchange, as described in more detail below, as the BPY unit exchange.

 

    Following the completion of the Brookfield affiliate exchange and the declaration of the pre-closing dividend, Goldfinch will merge with and into GGP, with GGP surviving the merger, which we refer to as the merger. Following the consummation of the Transactions, we refer to GGP as BPR (or the surviving corporation).

 

   

Immediately following the effective time of the merger, BPY or an affiliate of BPY will exchange shares of class A stock distributed as the pre-closing dividend held by any unaffiliated GGP common stockholders who had made an election to receive BPY units for an equal number of BPY units in the BPY unit exchange. Each share of class A stock that BPY or its affiliate received pursuant to the BPY unit exchange will automatically convert into class B stock at a ratio equal to the per share fair market value of class A stock divided by the per share liquidation amount of class B stock. In the event that (i) an election to receive BPY units has been made with respect to 80% or more of the shares of class A stock to be issued in the pre-closing dividend (or such event is deemed to have occurred pursuant to the terms of the merger agreement) and BPY elects to exchange all shares of class A stock that are issued in the pre-closing dividend for BPY units in the BPY unit exchange or (ii) an election to receive BPY units has been made with respect to 90% or more of the shares of class A stock to be issued in the pre-closing dividend (or such event is deemed to have occurred pursuant to the terms of the merger agreement), then all shares of class A


Table of Contents
 

stock that are issued in the pre-closing dividend will automatically be exchanged for BPY units in the BPY unit exchange (clause (i) and (ii) are collectively referred to herein as the full BPY exchange). Any shares entitled to make such an election with respect to which the payment agent has not received an effective, properly completed election form on or before 5:00 p.m., Eastern time, on the 25th day following the date when the election forms are mailed, or such other time as GGP and BPY shall agree will be deemed to be non-electing shares. Each such non-electing share will be deemed to have made a cash election for purposes of the pre-closing dividend, and therefore will be deemed to have made an election to immediately convert to BPY units any shares of class A stock received or is entitled to receive due to proration. For further information regarding non-electing shares, refer to the section entitled “The Merger Agreement—Structure and Timing of the Transactions—The Pre-Closing Dividend” beginning on page [—] of the attached joint proxy statement/prospectus.

 

    Each share of GGP common stock that is issued and outstanding immediately prior to the effective time of the merger (except for certain excluded shares of GGP common stock, which include shares owned by BPY, Goldfinch, if any, or GGP, shares of GGP common stock for which appraisal is properly demanded and shares of GGP restricted stock) will be cancelled and extinguished and automatically converted into the right to receive cash from BPY, without interest thereon, in an amount, which we refer to as the per share merger consideration, equal to the quotient of (i) $9,250,000,000 less (a) the aggregate cash payment required to be made pursuant to the GGPOP partnership agreement to holders of common units of GGPOP as a result of the Transactions at any time following the Brookfield affiliate exchange through and including the effective time of the merger, less (b) the aggregate cash payment required to be made pursuant to the GGPOP partnership agreement, to holders of the class of units designated under the GGPOP partnership agreement as “LTIP units,” as a result of the Transactions at any time following the Brookfield affiliate exchange through and including the effective time of the merger, less (c) the aggregate cash consideration to be paid with respect to shares of GGP restricted stock as a result of the Transactions through and including the effective time of the merger and less (d) the amount designated by BPY to GGP that constitutes the aggregate amount of cash that GGP will declare as the pre-closing dividend, divided by (ii) the pre-closing dividend share number. Pursuant to the merger agreement, in no event will the aggregate merger consideration be less than $200,000,000.

 

    Each share of Goldfinch common stock that is outstanding immediately prior to the effective time of the merger will be converted into a number of shares of class C stock equivalent to the pre-closing dividend share number divided by the number of outstanding shares of Goldfinch common stock (rounded to the nearest whole share).

One (1) share of class A stock is intended to provide an economic return equivalent to one (1) BPY unit, and is exchangeable for one (1) BPY unit or its cash equivalent (the form of payment to be determined by Brookfield Properties, Inc., an affiliate of BPY, in its sole discretion) at any time from and after the date of the issuance of the class A stock as described in more detail in the joint proxy statement/prospectus.

The pre-closing dividend is expected to be treated as a dividend for U.S. federal income tax purposes to the extent it is paid out of GGP’s earnings and profits, which is expected to include a substantial amount of gain that is expected to be recognized as a result of certain pre-closing transactions that BPY may request GGP to enter into pursuant to merger agreement after the Brookfield affiliate exchange. To the extent the pre-closing dividend exceeds GGP’s earnings and profits, it is expected to be treated as a non-taxable return of capital which will reduce an unaffiliated GGP common stockholder’s tax basis with respect to their shares of GGP common stock, to the extent the unaffiliated GGP common stockholder has adjusted tax basis in its GGP common stock, and to the extent it exceeds the unaffiliated GGP common stockholder’s adjusted tax basis, it is expected to result in gain being recognized by the unaffiliated GGP common stockholder. The conversion of shares of GGP common stock held by unaffiliated GGP common stockholders into the right to receive the merger consideration in the merger, and the exchange of class A stock for BPY units at the election of an unaffiliated GGP common stockholder, are each expected to result in gain or loss being recognized by the unaffiliated GGP common stockholder. However, certain aspects of the tax consequences of the Transactions are not entirely clear, and each GGP common stockholder is strongly urged to consult its tax advisor regarding the potential U.S. federal income tax consequences to it of the Transactions. For a more complete discussion of the U.S. federal income tax consequences of the Transactions, refer to the section entitled “Material U.S. Federal Income Tax Considerations and Consequences—Material U.S. Federal Income Tax Considerations and Consequences of the Transactions” beginning on page [—] of the attached joint proxy statement/prospectus.

Shares of class A stock are expected to be listed on the NASDAQ Stock Market, which we refer to as the NASDAQ, under the trading symbol “BPR.” The aggregate number of shares of class A stock or BPY units that unaffiliated GGP common stockholders will receive in connection with the Transactions will be based upon the number of shares of GGP common stock actually outstanding as of the record date of the pre-closing dividend. The market value of such shares of class A stock or BPY units received may fluctuate with the market price of class A stock and BPY units. We urge you to obtain current market quotations for GGP common stock (trading symbol GGP) and BPY units (trading symbol BPY on the NASDAQ or BPY.UN on the TSX).

Under the terms of the merger agreement, as of the effective time of the merger, the board of directors of GGP, which we refer to as the GGP board, will consist of the directors selected by BPY, which directors will be approved by the GGP board prior to the effective time of the merger. BPY has not yet made any such selections. It is expected that the current members of the board of directors of the general partner of BPY will comprise the board of directors of BPR after the effective time of the merger.


Table of Contents

GGP will hold a special meeting of stockholders in connection with the Transactions, which we refer to as the special meeting. GGP common stockholders will be asked to (i) vote to adopt the merger agreement as described in the attached joint proxy statement/prospectus, which we refer to as the merger proposal; (ii) approve the amendments to, and restatement of, each of GGP’s certificate of incorporation and bylaws, which we refer to as the charter proposals and the bylaws proposals, respectively; and (iii) approve, by a non-binding, advisory vote, the compensation that may become payable to the GGP named executive officers in connection with the Transactions, which we refer to as the compensation proposal. Adoption of the merger proposal requires the affirmative vote of the holders of a majority of the outstanding shares of GGP common stock, and the affirmative vote of the holders of a majority of the outstanding target shares, which we refer to as the merger stockholder approval. Adoption of each of the charter proposals and the bylaws proposals requires the affirmative vote of the holders of at least 66-2/3% of the outstanding shares of GGP common stock (which we refer to, together with the merger stockholder approval, as the requisite stockholder approval). Certain affiliates of BPY, who collectively beneficially own shares of GGP common stock representing, in the aggregate, approximately 34% of the total outstanding GGP common stock as of the date of the merger agreement, have entered into a voting and support agreement with GGP to vote their shares of GGP common stock in favor of the merger proposal, the charter proposals and the bylaws proposals.

Holders of GGP’s pre-existing series A cumulative perpetual preferred stock are not entitled to, and are not requested to, vote at the special meeting.

As discussed in the attached joint proxy statement/prospectus, GGP common stockholders are entitled to appraisal rights solely in connection with the merger.

The special meeting will be held on [—] at GGP’s principal executive offices located at 350 N. Orleans St., Suite 300, Chicago, Illinois 60654-1607, commencing at [—] (Chicago time).

The GGP board, following the unanimous recommendation of a special committee of the GGP board, comprised entirely of non-management independent directors who are not affiliated with BPY, which we refer to as the special committee, recommends that GGP common stockholders vote “FOR” the merger proposal, “FOR” the charter proposals, “FOR” the bylaws proposals and “FOR” the compensation proposal.

Your vote is very important. Regardless of whether you plan to attend the special meeting, please vote as soon as possible. If you hold stock in your name as a stockholder of record of GGP, please vote via the Internet or by telephone following the instructions set forth on the accompanying proxy card or complete, sign, date and return the accompanying proxy card in the enclosed postage-paid return envelope. If you hold your stock in street name through a broker or other nominee, please follow the instructions on the voting instruction card furnished by such firm. You may also attend the special meeting in person and cast your vote at the meeting there provided that you bring an admission ticket and government-issued picture identification. For instructions on obtaining an admission ticket, refer to the section entitled The Special Meeting—Attendance beginning on page [—] of the attached joint proxy statement/prospectus. If you abstain or fail to vote your shares in favor of the merger proposal, charter proposals and bylaws proposals, including broker non-votes, this will have the same effect as a vote “AGAINST” such proposals.

The attached joint proxy statement/prospectus provides a detailed description of the special meeting, the Transaction Agreements, including the merger agreement, the Transactions and other related matters. Please read carefully the entire joint proxy statement/prospectus, including “Risk Factors” beginning on page [—] of the attached joint proxy statement/prospectus, for a discussion of the risks relating to the Transactions. You also can obtain information about GGP and BPY from documents that each has filed with the U.S. Securities and Exchange Commission.

I enthusiastically support this combination of our companies and join with the GGP board in recommending you vote “FOR” the approval of the proposals in the attached joint proxy statement/prospectus.

Sincerely,

Sandeep Mathrani

Chief Executive Officer

GGP Inc.

Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued in connection with the Transactions or passed upon the adequacy or accuracy of the attached joint proxy statement/prospectus. Any representation to the contrary is a criminal offense.

The date of this joint proxy statement/prospectus is [—], 2018, and it is first being mailed or otherwise delivered to the stockholders of GGP on or about [—], 2018.


Table of Contents

LOGO

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To Be Held on [—], 2018

To the Stockholders of GGP Inc.:

GGP Inc., a Delaware corporation, which we refer to as GGP, will hold a special meeting of holders of GGP common stock, which we refer to as GGP common stockholders, commencing at [—] (Chicago time), on [—] at GGP’s principal executive offices located at 350 N. Orleans St., Suite 300, Chicago, Illinois 60654-1607, which we refer to as the special meeting, to consider and vote on the following matters:

 

1. a proposal to adopt the Agreement and Plan of Merger, dated as of March 26, 2018, among Brookfield Property Partners L.P., which we refer to as BPY, Goldfinch Merger Sub Corp., an indirect, wholly owned subsidiary of BPY which we refer to as Goldfinch, and which we refer to together with BPY as the Parent parties, and GGP, as amended from time to time in accordance with its terms, which we refer to as the merger agreement, pursuant to which BPY has agreed to acquire GGP, through a series of transactions, as more fully described in this joint proxy statement/prospectus (we refer to the foregoing proposal as the merger proposal, and following the consummation of the Transactions, we refer to GGP as BPR);

 

2. a proposal to approve amending the GGP certificate of incorporation to authorize new classes of capital stock and implement other ancillary amendments. The certificate of incorporation, as amended by this proposal and proposal 3, which we refer to as the amended charter, would (i) authorize the issuance of and establish the rights, powers, preferences, privileges, restrictions and other matters relating to class A stock, class B stock and class C stock; (ii) remove the ability of stockholders to prohibit the board of directors of BPR, which we refer to as the BPR board, from further amending the bylaws that were amended by such stockholders; (iii) permit the holders of class B stock and class C stock to take action by consent in lieu of a stockholder meeting on matters that only the holders of class B stock or class C stock (and/or both classes) are entitled to vote on; (iv) amend the forum selection provision of Article XI to require certain actions against stockholders of BPR to be brought exclusively in the Court of Chancery of the State of Delaware, and to expressly permit BPR to waive the forum selection provision with respect to certain proceedings; (v) eliminate provisions that currently prohibit GGP and would otherwise prohibit BPR from issuing any class of non-voting equity securities under certain circumstances; (vi) change the name of GGP to Brookfield Property REIT Inc.; (vii) amend the terms of GGP’s pre-existing series A preferred stock to preserve the conversion right of such stock under its current terms, including among other things, to provide that the new series A preferred stock is convertible into either class A stock or class C stock in certain circumstances; and (viii) otherwise amend the GGP certificate of incorporation to read as set forth on Annex B attached to this joint proxy statement/prospectus, except for the amendments set forth in proposal 3. A vote in favor of this proposal will be deemed to constitute approval of the filing of a restated certificate of incorporation enacting the amendments set forth in this proposal;

 

3. a proposal to approve amending the GGP certificate of incorporation to impose certain supermajority voting requirements. As amended by this proposal, the amended charter would (i) increase the number of stockholder votes required to amend or repeal the bylaws from the current voting requirement to 66-2/3% of the voting power of the capital stock entitled to vote, unless the BPR board recommends that stockholders approve such amendment or repeal; and (ii) increase the number of stockholder votes required to remove a director (either with or without cause) from a majority to 66-2/3% of the voting power of the capital stock entitled to vote. A vote in favor of this proposal will be deemed to constitute approval of the filing of a restated certificate of incorporation enacting the amendments set forth in this proposal;

 

4. a proposal to approve amending the GGP bylaws to include a provision requiring BPR to include in its proxy statements and proxy cards director candidates selected by a BPY affiliate. A vote in favor of this proposal will be deemed to constitute approval of restated bylaws enacting the amendments set forth in this proposal;


Table of Contents
5. a proposal to approve amending the GGP bylaws to eliminate the stockholders’ power to call special meetings and to implement other ancillary amendments. As amended, the amended bylaws would (i) remove the ability of stockholders to call special meetings of stockholders; (ii) insert in the BPR bylaws the same provisions that will appear in the charter amendments to provide that the number of stockholder votes required to amend or repeal the bylaws will be 66-2/3% of the voting power of the capital stock entitled to vote, unless the BPR board recommends that the stockholders approve such amendment or repeal; (iii) eliminate the requirement that the BPR board appoint a lead director when the chairman of the BPR board is a current or former executive officer of BPR or is not otherwise an independent director, and instead provide that a lead director may be selected by the independent directors (with “independent director” having the meaning given in the listing standards of the principal stock exchange on which BPR’s stock is listed); and (iv) otherwise amend the GGP bylaws to read as set forth in Annex C attached to this joint proxy statement/prospectus, except for the amendments set forth in proposal 4. A vote in favor of this proposal will be deemed to constitute approval of restated bylaws enacting the amendments set forth in this proposal;

 

6. a proposal to approve, by non-binding, advisory vote, the compensation that may become payable to the GGP named executive officers in connection with the transactions contemplated by the merger agreement and certain other related transaction agreements, which we refer to as the compensation proposal; and

 

7. any other business as may be properly submitted for stockholder action by or at the direction of the board of directors of GGP, which we refer to as the GGP board.

We have fixed the close of business on June [—], 2018 as the record date for the special meeting, which we refer to as the special meeting record date. Only GGP common stockholders of record at that time are entitled to notice of, and to vote at, the special meeting or any adjournment or postponement of the special meeting. Adoption of the merger proposal requires the affirmative vote of the holders of a majority of the outstanding shares of GGP common stock, and the affirmative vote of the holders of a majority of the outstanding shares of GGP common stock not owned by BPY or its affiliates, which we refer to as the merger stockholder approval. Adoption of each of the charter proposals and the bylaws proposals requires the affirmative vote of the holders of at least 66-2/3% of the outstanding shares of GGP common stock (which we refer to, together with the merger stockholder approval, as the requisite stockholder approval). As described in this joint proxy statement/prospectus, we cannot complete the transactions contemplated by the merger agreement and certain other related transaction agreements described above unless we receive the requisite stockholder approval. Certain affiliates of BPY, who we refer to collectively as the Brookfield voting parties and who collectively beneficially own shares of GGP common stock representing, in the aggregate, approximately 34% of the total outstanding GGP common stock as of the date of the merger agreement have entered into a voting agreement and support agreement with GGP, which we refer to as the voting agreement, to vote their shares of GGP common stock in favor of the merger proposal, the charter proposals and the bylaws proposals. For information, refer to the section entitled “Other Transaction Agreements—The Voting Agreement” beginning on page [—] of this joint proxy statement/prospectus.

Your proxy is being solicited by the GGP board. The GGP board, following the unanimous recommendation of a special committee of the GGP board, comprised entirely of non-management independent directors who are not affiliated with BPY, which we refer to as the special committee, has determined that each of the merger agreement, the transactions contemplated by the merger agreement, and certain other related transaction agreements described in this joint proxy statement/prospectus are advisable and in the best interests of GGP and GGP common stockholders. Accordingly, the GGP board, following the unanimous recommendation of the special committee, recommends that you vote FOR the merger proposal, FOR the charter proposals, FOR the bylaws proposals and FOR the compensation proposal.

Your vote is very important. Regardless of whether you plan to attend the special meeting, please vote as soon as possible. If you hold stock in your name as a stockholder of record of GGP, please vote via the Internet or by telephone following the instructions set forth on the accompanying proxy card or complete, sign, date and return the accompanying proxy card in the enclosed postage-paid return envelope. If you hold your stock in “street name” through a broker or other nominee, please follow the instructions on the


Table of Contents

voting instruction card furnished by such firm. You may also attend the special meeting in person and cast your vote at the meeting provided that you bring an admission ticket and government-issued picture identification. For instructions on obtaining an admission ticket, refer to the section entitled “The Special Meeting—Attendance” beginning on page [—] of this joint proxy statement/prospectus. If you abstain or fail to vote your shares in favor of the merger proposal, charter proposals and bylaws proposals, including broker non-votes, this will have the same effect as a vote “AGAINST” such proposals.

The enclosed joint proxy statement/prospectus provides a detailed description of the special meeting, the merger agreement and certain other transaction agreements contemplated by the merger agreement, the transactions contemplated thereby and other related matters. We urge you to read the joint proxy statement/prospectus, including any documents incorporated in the joint proxy statement/prospectus by reference, and its annexes carefully and in their entirety.

If you have any questions regarding the accompanying joint proxy statement/prospectus, you may contact Innisfree M&A Incorporated, GGP’s proxy solicitor, by calling toll-free: (888) 750-5834.

BY ORDER OF THE BOARD OF DIRECTORS,

Sandeep Mathrani

Chief Executive Officer

GGP Inc.


Table of Contents

ADDITIONAL INFORMATION

This joint proxy statement/prospectus incorporates by reference important business and financial information about GGP and BPY from documents filed with the U.S. Securities and Exchange Commission, which we refer to as the SEC, that are not included in or delivered with this joint proxy statement/prospectus. You can obtain any of the documents filed with or furnished to the SEC by GGP or BPY at no cost from the SEC’s website at http://www.sec.gov or at the SEC’s public reference room located at 100 F Street, N.E. Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for additional information on the Public Reference Room. You may also request copies of these documents, including documents incorporated by reference in this joint proxy statement/prospectus, at no cost by contacting the appropriate company at the following addresses, telephone numbers or websites:

 

GGP

350 N. Orleans St., Suite 300

Chicago, Illinois 60654

Attention: Investor Relations

Telephone: (312) 960-5000

www.ggp.com

  

BPY

73 Front Street, 5th Floor

Hamilton, HM 12 Bermuda

Attention: Investor Relations

Telephone: (855) 212-8243

www.bpy.brookfield.com

GGP common stockholders can also contact Innisfree M&A Incorporated, GGP’s proxy solicitor, at the following address and telephone number:

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, New York 10022

Stockholders may call toll-free:

(888) 750-5834

Banks and Brokers may call collect: (212) 750-5833

(GGP common stockholders only)

You will not be charged for any of the documents that you request.

To obtain timely delivery of these documents, you must request them no later than five (5) business days before the date of the special meeting. This means that if you wish to request documents, you must do so by [—], 2018, in order to receive them before the special meeting.

Investors may also consult GGP’s or BPY’s website for additional information about GGP or BPY, respectively. GGP’s website is http://www.ggp.com and BPY’s website is http://www.bpy.brookfield.com. Information included on these websites is not incorporated by reference into, and does not form a part of, this joint proxy statement/prospectus.

Refer to the section entitled “Where You Can Find More Information; Incorporation by Reference” beginning on page [—] of this joint proxy statement/prospectus for more details.

 

i


Table of Contents

ABOUT THIS JOINT PROXY STATEMENT/PROSPECTUS

This joint proxy statement/prospectus, which forms part of a registration statement on Form S-4/F-4 filed by GGP and BPY with the SEC, constitutes a prospectus of GGP and BPY for purposes of the Securities Act of 1933, as amended, which we refer to as the Securities Act, with respect to the class A stock, the new series A preferred stock and the BPY units to be issued in connection with the transactions contemplated by the merger agreement and certain other transaction agreements contemplated by the merger agreement. This joint proxy statement/prospectus also constitutes a proxy statement for GGP for the solicitation of proxies in connection with the special meeting for purposes of the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act. In addition, it constitutes a notice of meeting with respect to the special meeting.

You should rely only on the information contained or incorporated by reference into this joint proxy statement/prospectus. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this joint proxy statement/prospectus. This joint proxy statement/prospectus is dated [—], 2018. You should not assume that the information contained in this joint proxy statement/prospectus is accurate as of any other date. You should not assume that the information incorporated by reference into this joint proxy statement/prospectus is accurate as of any date other than the date of or date contemplated by such incorporated document. Neither the mailing of this joint proxy statement/prospectus nor the issuance of class A stock, new series A preferred stock or BPY units, as applicable, pursuant to the merger agreement and certain other transaction agreements contemplated by the merger agreement, will create any implication to the contrary.

This joint proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities or the solicitation of a proxy in any jurisdiction in which, or from any person with respect to whom, it is unlawful to make any such offer or solicitation in such jurisdiction. Information contained in this joint proxy statement/prospectus regarding GGP has been provided by GGP and information contained in this joint proxy statement/prospectus regarding BPY has been provided by BPY.

EXPLANATORY NOTE

References in this joint proxy statement/prospectus to “BPR” shall mean the surviving corporation following the consummation of the merger. It is expected that following the consummation of the Transactions, the surviving corporation will change its name to Brookfield Property REIT Inc., which will be a publicly traded U.S. REIT and will issue class A stock that is intended to provide economic equivalence to an investment in BPY, its parent company.

REPORTING CURRENCY AND CURRENCY EXCHANGE RATE INFORMATION

All references to “$” or “US$” mean U.S. dollars. References to “C$” mean Canadian dollars. The Bank of Canada average daily rate of exchange on [—], 2018 for Canadian dollars was $1.00 = C$[—].

HISTORICAL FINANCIAL INFORMATION

This document contains information relating to historical financial information for BPY and GGP. When considering this information, you should bear in mind that historical results may not be indicative of future results.

Unless otherwise indicated, the financial information contained in this document related to BPY has been prepared in accordance with International Financial Reporting Standards, which we refer to as IFRS, as issued by

 

ii


Table of Contents

the International Accounting Standards Board, which we refer to as IASB, and the financial information contained in this document related to GGP and BPR has been prepared in accordance with U.S. generally accepted accounting principles, which we refer to as GAAP. You are cautioned that financial information prepared in accordance with IFRS may differ from such financial information prepared in accordance with GAAP, and accordingly, the historical results of BPY and GGP may not be comparable.

SELECTED DEFINITIONS

Unless otherwise indicated or as the context otherwise requires, a reference in this joint proxy statement/prospectus to:

 

    “aggregate cash dividend amount” refers to the amount designated by BPY to GGP that constitutes the aggregate amount of cash that GGP will declare as the pre-closing dividend;

 

    “BAM” refers to Brookfield Asset Management Inc.;

 

    “BAM PIC US” refers to Brookfield Asset Management Private Institutional Capital Adviser US, LLC;

 

    “BAM preferred share conversion” refers to BAM’s proposed conversion of its $500 million class C junior preferred shares of a BPY subsidiary into BPY units at a price of $23.50 per unit;

 

    “BPG” refers to Brookfield Property Group LLC;

 

    “BPI” refers to Brookfield Properties, Inc.;

 

    “BPO” refers to Brookfield Office Properties Inc.;

 

    “BPO exchange LP units” refers to the limited partnership units of Exchange LP;

 

    “BPR” refers to Brookfield Property REIT Inc., the surviving corporation following the consummation of the Transactions;

 

    “BPY” refers to Brookfield Property Partners L.P. a Bermuda exempted limited partnership;

 

    “BPY class A preferred units” refers to class A preferred limited partnership units of the BPY property partnership;

 

    “BPY general partner” refers to Brookfield Property Partners Limited, a Bermuda exempted company, which is an indirect wholly owned subsidiary of BAM and the general partner of BPY;

 

    “BPY property partnership” refers to Brookfield Property L.P., a Bermuda exempted limited partnership and the subsidiary operating partnership of BPY;

 

    “BPY Sub 3” refers to Brookfield Retail Holdings VII Sub 3 LLC;

 

    “BPY unit closing price” refers to the calculation of the volume weighted average of the trading prices of BPY units on the NASDAQ on the five (5) trading days ending on the day that is three (3) trading days prior to the effective time of the charter amendments (rounded to the nearest $0.001);

 

    “BPY unit exchange” refers to the option by which unaffiliated GGP common stockholders who elect to receive the pre-closing dividend in the form of class A stock may exchange all, but not less than all, shares of class A stock that such holder received or is entitled to receive as the pre-closing dividend for the limited partnership units of BPY;

 

    “BPY unitholder consent letter agreement” refers to the letter agreement, dated as of March 26, 2018, between BAM and GGP, entered into in connection with the execution of the merger agreement, which we refer to in the section entitled “Other Transaction Agreements—The BPY Unitholder Consent Letter Agreement” beginning on page [—] of this joint proxy statement/prospectus;

 

    “BPY units” refers to the limited partnership units of BPY;

 

iii


Table of Contents
    “Brookfield affiliate exchange” refers to the exchange of all shares of GGP common stock held by BPY and BPY’s affiliates for class B stock, immediately following the effective time of the charter amendments and the partnership agreement amendment and restatement, and subject to the conditions set forth in the class B exchange agreement and the merger agreement;

 

    “Brookfield filing persons” refers to BAM, BPY Sub 3, Brookfield BPY Retail Holdings II Subco LLC, New Brookfield BPY Retail Holdings II LLC, BPY Retail V LLC, BPY Retail I LLC, Brookfield Retail Mall LLC, Brookfield Retail Holdings II Sub III LLC, Brookfield Retail Holdings Warrants LLC, New GGP Warrants LLC, BW Purchaser, LLC and Brookfield Retail Holdings VII LLC, collectively;

 

    “Brookfield Property REIT Inc.” refers to the surviving corporation following the Transactions;

 

    “Brookfield voting parties” refers collectively to the following entities: Brookfield Retail Holdings II Sub III LLC, Brookfield BPY Retail Holdings II Subco LLC, New Brookfield BPY Retail Holdings II LLC, BPY Retail V LLC, BPY Retail I LLC, Brookfield Retail Holdings VII LLC, Brookfield Retail Mall LLC, Brookfield Retail Holdings Warrants LLC, New GGP Warrants LLC and BW Purchaser, LLC;

 

    “bylaws amendments” refers to the amendments to, and restatement of, the GGP bylaws contemplated by the merger agreement;

 

    “bylaws proposals” refers to proposals 4 and 5 of this joint proxy statement/prospectus to amend and restate the GGP bylaws at the special meeting;

 

    “charter amendments” refers to the amendments to, and restatement of, the GGP charter contemplated by the merger agreement;

 

    “charter amendments closing” refers to the filing of the charter amendments with the Secretary of State of the State of Delaware;

 

    “charter proposals” refers to proposals 2 and 3 of this joint proxy statement/prospectus to amend and restate the GGP charter at the special meeting;

 

    “class A stock” refers to the new series of class A stock authorized by the amended charter;

 

    “class B exchange agreement” refers to the class B stock exchange agreement, dated as of March 26, 2018, among the Brookfield voting parties and GGP, entered into in connection with the execution of the merger agreement, which we refer to in the section entitled “Other Transaction Agreements—The Class B Exchange Agreement” beginning on page [—] of this joint proxy statement/prospectus;

 

    “class B stock” refers to the new series of class B stock authorized by the amended charter;

 

    “class C stock” refers to the new series of class C stock authorized by the amended charter;

 

    “combined company” refers to BPY, subsidiaries of BPY, BPR and subsidiaries of BPR, taken as a whole;

 

    “compensation proposal” refers to the proposal to approve, on an advisory, non-binding basis, the compensation that may become payable to the GGP named executive officers in connection with the Transactions at the special meeting;

 

    “Cumulus” refers to GGP Limited Partnership;

 

    “deemed stockholder” refers to a deemed holder of GGP common stock in respect of any in-the-money options to purchase GGP common stock outstanding under any GGP stock plan that were granted prior to January 1, 2018;

 

    “equity award aggregate cash equivalent amount” refers to the amount (rounded to the nearest $0.001) equal to the sum of (i) the equity award average stock amount plus (ii) the equity award average cash amount;

 

iv


Table of Contents
    “equity award aggregate stock equivalent amount” refers to the number (rounded to the nearest 0.001) of BPY units equal to (i) the equity award average stock consideration plus (ii) the quotient of (a) the equity award average cash amount divided by (b) the BPY unit closing price;

 

    “equity award average cash amount” refers to the value (rounded to the nearest $0.001) of the aggregate cash consideration that would be paid in respect of each share of GGP common stock (other than shares of GGP restricted stock but including the number of shares of GGP common stock deemed received in respect of GGP in-the-money options) in connection with (i) the pre-closing dividend, assuming that every share makes a cash election and the form of consideration is prorated in accordance with the merger agreement, and (ii) the per share merger consideration;

 

    “equity award average stock amount” refers to the value (rounded to the nearest $0.001) equal to (i) the equity award average stock consideration multiplied by (ii) the BPY unit closing price;

 

    “equity award average stock consideration” refers to the number (rounded to the nearest 0.001) of BPY units equal to the quotient of (i) $23.50 less the equity award average cash amount divided by (ii) $23.50;

 

    “Exchange LP” refers to Brookfield Office Properties Exchange LP;

 

    “FOMC” refers to the Federal Open Market Committee of the Board of Governors of the Federal Reserve System;

 

    “GGP” refers to GGP Inc.;

 

    “GGP AO LTIP” refers to a GGP equity award in the form of an appreciation-only partnership LTIP unit of GGPOP;

 

    “GGP bylaws” refers to the current bylaws of GGP;

 

    “GGP charter” refers to the current certificate of incorporation of GGP;

 

    “GGP common stock” refers to GGP’s one class of common stock;

 

    “GGP FV LTIP” refers to a GGP equity award in the form of a full value partnership LTIP unit of GGPOP;

 

    “GGP in-the-money option” refers to a GGP option that was granted prior to January 1, 2018 and has an exercise price that is less than the aggregate value of the pre-closing dividend and per share merger consideration;

 

    “GGP LP II” refers to GGP Limited Partnership II;

 

    “GGP option” refers to an option to purchase shares of GGP common stock;

 

    “GGP out-of-the-money option” refers to a GGP option that was granted in 2018 and/or has an exercise price that is equal to or greater than the aggregate value of the pre-closing dividend and per share merger consideration;

 

    “GGP restricted stock” refers to GGP common stock that is subject to vesting or forfeiture conditions;

 

    “GGP units” refers to GGPOP’s (i) three series of preferred units held by third parties, the series B preferred units, the series D preferred units and the series E preferred units, and (ii) four series of preferred units held by Holding II, the series F preferred units, the series G preferred units, the series I preferred units and the series J preferred units;

 

    “GGP’s pre-existing series A preferred stock” refers to the pre-existing 6.375% series A cumulative perpetual preferred stock of GGP;

 

    “GGPOP” refers to GGP Operating Partnership, LP;

 

    “GGPOP common units” refers to the common units of GGPOP;

 

v


Table of Contents
    “GGPOP partnership agreement” refers to the agreement of limited partnership of GGPOP;

 

    “Goldfinch” refers to Goldfinch Merger Sub Corp.;

 

    “Goldman Sachs” refers to Goldman Sachs & Co. LLC;

 

    “Holding I” refers to GGP Real Estate Holding I, Inc.;

 

    “Holding II” refers to GGP Real Estate Holding II, Inc.;

 

    “joint governance agreement” refers to the joint governance agreement among BPR, BPY, the BPY general partner and BPI, which we refer to in the section entitled “Special Factors—Governance of BPR Following the Transactions—Joint Governance Agreement” beginning on page [—] of this joint proxy statement/prospectus;

 

    “management fee letter agreement” refers to the letter agreement, dated as of March 26, 2018, among BAM, BPY and GGP, entered into in connection with the execution of the merger agreement, which we refer to in the section entitled “Other Transaction Agreements—The Management Fee Letter Agreement” beginning on page [—] of this joint proxy statement/prospectus;

 

    “merger” refers to the merger of Goldfinch with and into GGP, with GGP surviving the merger;

 

    “merger agreement” refers to the Agreement and Plan of Merger, dated as of March 26, 2018, among BPY, Goldfinch and GGP, as amended from time to time in accordance with its terms;

 

    “merger consideration” refers to the per share merger consideration multiplied by the pre-closing dividend share number;

 

    “merger proposal” refers to the proposal to adopt the merger agreement at the special meeting;

 

    “new series A preferred stock” refers to shares of 6.375% series A cumulative perpetual preferred stock being issued by BPR in exchange for GGP’s pre-existing series A preferred stock;

 

    “Nimbus” refers to GGP Nimbus, LP;

 

    “Parent parties” refers to BPY and Goldfinch, collectively;

 

    “partnership agreement amendment and restatement” refers to the amendment and restatement of the GGPOP partnership agreement contemplated by the merger agreement;

 

    “partnership LTIP units” refers to the LTIP units of GGPOP;

 

    “per share merger consideration” refers to an amount of cash equal to the quotient of (i) $9,250,000,000 less (a) the aggregate cash payment required to be made pursuant to the GGPOP partnership agreement to holders of common units of GGPOP as a result of the Transactions at any time following the Brookfield affiliate exchange through and including the effective time of the merger, less (b) the aggregate cash payment required to be made pursuant to the GGPOP partnership agreement, to holders of the class of units designated under the GGPOP partnership agreement as “LTIP units,” as a result of the Transactions at any time following the Brookfield affiliate exchange through and including the effective time of the merger, less (c) the aggregate cash consideration to be paid with respect to shares of GGP restricted stock as a result of the Transactions through and including the effective time of the merger and less (d) the aggregate cash dividend amount, divided by (ii) the pre-closing dividend share number;

 

    “pre-closing dividend” refers to the special dividend declared by GGP, following the Brookfield affiliate exchange and the pre-closing transactions, payable to the unaffiliated GGP common stockholders (not including holders of GGP restricted stock, but including certain holders of GGP options who are deemed stockholders), as of the record date of the pre-closing dividend, consisting of either cash or class A stock, at the election of such GGP common stockholders (with deemed stockholders being deemed to have elected cash) and subject to proration;

 

vi


Table of Contents
    “pre-closing dividend share number” refers to the number of shares of GGP common stock that are entitled to the pre-closing dividend (which excludes shares of GGP restricted stock but includes deemed shares of GGP common stock in respect of in-the-money options as described herein);

 

    “pre-closing transactions” refers to certain transactions as BPY may request between the date of the merger agreement and the closing of the Transactions, in its sole discretion and without requiring the further consent of GGP or the GGP board, for the purpose of facilitating the consummation of the Transactions, upon reasonable prior written notice to GGP (but at least five (5) business days prior to the charter amendments closing);

 

    “redemption-exchange units” refers to non-voting limited partnership interests in the BPY property partnership that are redeemable for cash, subject to the right of BPY to acquire such interests for BPY units;

 

    “rights agreement” refers to the Rights Agreement, dated as of April 27, 2018, by and between BAM and Wilmington Trust, National Association, which we refer to in the section entitled “Other Transaction Agreements—The Rights Agreement” beginning on page [—] of this joint proxy statement/prospectus;

 

    “sellco” refers to certain of GGP’s subsidiaries, individually or collectively, which may be newly formed subsidiaries formed at the direction of BPY;

 

    “target shares” refers to the shares of GGP common stock held by the unaffiliated GGP common stockholders;

 

    “surviving corporation” refers to BPR, the surviving corporation following the Transactions;

 

    “unaffiliated GGP common stockholders” refers to holders of those shares of GGP common stock that are not exchanged in connection with the Brookfield affiliate exchange; and

 

    “voting agreement” refers to the voting and support agreement, dated as of March 26, 2018, among the Brookfield voting parties and GGP, entered into in connection with the execution of the merger agreement, which we refer to in the section entitled “Other Transaction Agreements—The Voting Agreement” beginning on page [—] of this joint proxy statement/prospectus.

 

vii


Table of Contents

TABLE OF CONTENTS

 

Index    Page  

QUESTIONS AND ANSWERS

     1  

SUMMARY

     21  

Parties to the Merger Agreement

     21  

The Transactions

     22  

Treatment of GGP Equity Awards

     23  

Post-Closing Ownership

     26  

Financing Related to the Transactions

     27  

Plans for BPR Following the Transactions

     27  

Governance of BPR Following the Transactions

     27  

The Special Meeting

     28  

Recommendation of the Special Committee and the GGP Board

     29  

Opinion of Goldman Sachs & Co. LLC

     29  

Purpose and Reasons of the Parent Parties and the Brookfield Filing Persons for the Transactions

     30  

Positions of the Parent Parties and the Brookfield Filing Persons as to the Fairness of the Transactions

     30  

Stock Ownership and Voting of Directors and Executive Officers of GGP

     31  

Interests of GGP’s Directors and Executive Officers in the Transactions

     31  

Listing of Class A Stock, New Series  A Preferred Stock and BPY Units

     31  

Appraisal Rights

     32  

Conditions to Consummation of the Charter Amendments, the Bylaws Amendments, the Partnership Agreement Amendment and Restatement and the Merger

     32  

Regulatory Approvals

     34  

No Solicitation or Negotiation of Acquisition Proposals

     34  

No Change in Recommendation or Alternative Acquisition

     35  

Termination of the Merger Agreement

     36  

Termination Fees and Expenses

     37  

Specific Performance

     38  

Material U.S. Federal Income Tax Considerations and Consequences

     39  

Accounting Treatment of the Transactions

     39  

Comparison of Rights of Holders of GGP Common Stock, Class  A Stock and BPY Units

     40  

Comparison of Rights of Holders of GGP’s Pre-Existing Series A Preferred Stock and New Series A Preferred Stock

     40  

Litigation Relating to the Transactions

     41  

Risk Factors

     42  

SELECTED HISTORICAL FINANCIAL INFORMATION OF GGP

     43  

SELECTED HISTORICAL FINANCIAL INFORMATION OF BPY

     45  

SELECTED UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA OF BPY FOLLOWING THE TRANSACTIONS

     47  

SELECTED UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA OF BPR FOLLOWING THE TRANSACTIONS

     49  

UNAUDITED COMPARATIVE PER UNIT AND PER SHARE DATA

     50  

COMPARATIVE GGP AND BPY MARKET PRICE AND DIVIDEND/DISTRIBUTION INFORMATION

     52  

GGP’s Market Price Data and Dividend Data

     52  

BPY’s Market Price Data and Distribution Data

     52  

Recent Closing Prices

     54  

 

viii


Table of Contents
Index    Page  

RATIO OF CONSOLIDATED EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DISTRIBUTIONS

     55  

SPECIAL FACTORS

     56  

General

     56  

Background of the Transactions

     56  

Reasons for the Transactions and Recommendation of the Special Committee and the GGP Board

     80  

Opinion of Goldman Sachs & Co. LLC

     91  

Certain GGP Forecasts

     105  

Certain BPY Forecasts

     108  

Purpose and Reasons of the Parent Parties and the Brookfield Filing Persons for the Transactions

     113  

Positions of the Parent Parties and the Brookfield Filing Persons as to the Fairness of the Transactions

     119  

Plans for BPR After the Transactions

     123  

Certain Effects of the Merger and Transactions

     124  

Financing Arrangements

     129  

Governance of BPR Following the Transactions

     130  

Interests of GGP’s Directors and Executive Officers in the Transactions

     135  

Certain Related Party Agreements between GGP and the Brookfield Filing Persons

     142  

Regulatory Approval

     143  

Accounting Treatment of the Transactions

     143  

Listing of Class A Stock

     144  

Listing of New Series A Preferred Stock

     144  

Listing of Newly Issued BPY Units

     144  

Delisting and Deregistration of GGP Common Stock and GGP’s Pre-Existing Series A Preferred Stock

     144  

Restrictions on Sales of Shares of Class  A Stock Received in Connection with the Transactions

     145  

Restrictions on Sales of BPY Units Received in Connection with the Transactions

     145  

Litigation Relating to the Transactions

     145  

Availability of Documents

     146  

RISK FACTORS

     147  

Risks Relating to the Transactions

     147  

Risks Relating to an Investment in Class  A Stock Following the Transactions

     153  

Risks Relating to BPR and/or BPY Following the Transactions

     154  

Risks Relating to an Investment in BPR Series A Preferred Stock

     159  

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

     161  

PARTIES TO THE MERGER AGREEMENT

     163  

THE SPECIAL MEETING

     164  

Date, Time, Place and Purpose of the Special Meeting

     164  

Recommendation of the Special Committee and the GGP Board

     164  

Record Date; Who Can Vote at the Special Meeting

     164  

Stockholders of Record and Beneficial Owners

     165  

Quorum

     165  

Attendance

     165  

Vote Required for Approval; Effect of Failure to Vote, Broker Non-Votes and Abstention

     166  

How to Vote Your Shares

     166  

Revocation of Proxies or Voting Instructions

     167  

Adjournment

     167  

Tabulation of the Votes

     168  

Solicitation of Proxies

     168  

 

ix


Table of Contents
Index    Page  

PROPOSALS SUBMITTED TO GGP COMMON STOCKHOLDERS

     169  

Proposal 1—The Merger Proposal

     169  

Proposal  2—Proposal to Amend the GGP Charter to Authorize the New Classes of Capital Stock and Implement Other Ancillary Amendments

     169  

Proposal  3—Proposal to Amend the GGP Charter to Impose Certain Supermajority Voting Requirements

     170  

Proposal  4—Proposal to Amend the GGP Bylaws to Include a Provision Requiring BPR to Include in its Proxy Statements and Proxy Cards Director Candidates Selected by a BPY Affiliate

     170  

Proposal  5—Proposal to Amend the GGP Bylaws to Eliminate Stockholders’ Power to Call Special Meetings and to Implement Other Ancillary Amendments

     171  

Proposal 6—The Compensation Proposal

     171  

MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS AND CONSEQUENCES

     173  

Material U.S. Federal Income Tax Considerations and Consequences of the Transactions

     173  

Material U.S. Federal Income Taxation Consequences Applicable to Holders of Class A Stock

     176  

Material U.S. Federal Income Taxation Considerations Applicable to Holders of BPY Units

     194  

THE MERGER AGREEMENT

     195  

Structure and Timing of the Transactions

     195  

Treatment of GGP Equity Awards

     207  

The Closing of the Charter Amendments, the Bylaws Amendments, the Partnership Agreement Amendment and Restatement and the Merger

     209  

Exchange of Shares and the Escrow Arrangement

     209  

Representations and Warranties

     212  

Conditions to Consummation of the Charter Amendments, the Bylaws Amendments, the Partnership Agreement Amendment and Restatement and the Merger

     215  

Covenants and Agreements

     218  

Termination

     232  

Fees and Expenses

     234  

Miscellaneous Provisions

     236  

OTHER TRANSACTION AGREEMENTS

     237  

The Voting Agreement

     237  

The Class B Exchange Agreement

     237  

The Rights Agreement

     238  

The BPY Unitholder Consent Letter Agreement

     241  

The Management Fee Letter Agreement

     242  

CERTAIN INFORMATION CONCERNING GGP

     243  

GGP Background

     243  

Directors and Executive Officers

     243  

Prior Public Offerings

     246  

CERTAIN INFORMATION CONCERNING THE PARENT PARTIES AND THE BROOKFIELD FILING PERSONS

     247  

The Parent Parties and the BPY General Partner

     247  

The Brookfield Filing Persons

     250  

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR BPY

     255  

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR BPR

     269  

 

x


Table of Contents
Index    Page  

DESCRIPTION OF CLASS A STOCK

     279  

Voting Rights

     279  

Dividends

     279  

Liquidation

     280  

Power to Increase or Decrease the Authorized Number of Shares of Class A Stock

     281  

Power to Issue Additional Shares of Class A Stock

     281  

Exchange of Class A Stock for BPY Units

     281  

Transfer Restrictions

     281  

Listing and Transfer Agent

     282  

DESCRIPTION OF CLASS B STOCK

     283  

Voting Rights

     283  

Dividends

     283  

Liquidation

     283  

Power to Increase or Decrease the Authorized Number of Shares of Class B Stock

     284  

Power to Issue Additional Shares of Class B Stock

     284  

Transfer Restrictions

     284  

Listing and Transfer Agent

     284  

DESCRIPTION OF CLASS C STOCK

     285  

Voting Rights

     285  

Dividends

     285  

Liquidation

     285  

Power to Increase or Decrease the Authorized Number of Shares of Class C Stock

     285  

Power to Issue Additional Shares of Class C Stock

     286  

Transfer Restrictions

     286  

Listing and Transfer Agent

     286  

COMPARISON OF RIGHTS OF HOLDERS OF GGP SERIES  A PREFERRED STOCK AND NEW SERIES A PREFERRED STOCK

     287  

DESCRIPTION OF NEW SERIES A PREFERRED STOCK

     288  

Dividends

     288  

Ranking

     288  

Liquidation Preference

     288  

Optional Redemption

     288  

Special Optional Redemption

     289  

Conversion Rights

     289  

REIT Qualification Optional Redemption

     290  

Transfer Restrictions

     290  

No Maturity, Sinking Fund Mandatory Redemption

     290  

Voting Rights

     290  

Information Rights

     291  

Preemptive Rights

     291  

Listing and Transfer Agent

     291  

CERTAIN PROVISIONS OF THE DGCL AND OF THE AMENDED CHARTER AND AMENDED BYLAWS

     292  

DESCRIPTION OF BPY UNITS

     295  

BPY Units

     295  

Securities Exchangeable into BPY Units

     295  

Issuance of Additional Partnership Interests

     297  

Investments in the BPY Property Partnership

     297  

 

xi


Table of Contents
Index    Page  

Capital Contributions

     297  

Distributions

     298  

Limited Liability

     299  

No Management or Control; Limited Voting

     299  

Meetings

     300  

Amendment of BPY’s Limited Partnership Agreement

     300  

Election to be Treated as a Corporation

     302  

Accounts, Reports and Other Information

     302  

Governing Law; Submission to Jurisdiction

     302  

Transfers of Units

     303  

Service of Process and Enforceability of Civil Liabilities

     304  

PAST TRANSACTIONS INVOLVING GGP COMMON STOCK

     305  

COMPARISON OF RIGHTS OF HOLDERS OF GGP COMMON STOCK, CLASS  A STOCK AND BPY UNITS

     306  

CERTAIN BENEFICIAL OWNERSHIP OF GGP COMMON STOCK

     328  

Ownership of Equity Securities of GGP by Directors and Executive Officers

     328  

Ownership of Equity Securities of GGP by 5% Stockholders

     329  

GGP’S POLICIES WITH RESPECT TO CERTAIN ACTIVITIES

     331  

APPRAISAL RIGHTS IN THE MERGER

     332  

Written Demand by the Record Holder

     333  

Filing a Petition for Appraisal

     334  

Determination of Fair Value

     335  

GGP AND BPR STOCKHOLDER PROPOSALS FOR THE 2019 ANNUAL STOCKHOLDER MEETING

     337  

VALIDITY OF SECURITIES

     339  

EXPERTS

     339  

GGP

     339  

BPY

     339  

WHERE YOU CAN FIND MORE INFORMATION; INCORPORATION BY REFERENCE

     340  

ANNEX A—Agreement and Plan of Merger

     A-1  

ANNEX B—Form of Amended and Restated Certificate of Incorporation of BPR

     B-1  

ANNEX C—Form of Amended and Restated Bylaws of BPR

     C-1  

ANNEX D—Opinion of Goldman Sachs & Co. LLC

     D-1  

ANNEX E—Voting Agreement

     E-1  

ANNEX F—Class B Exchange Agreement

     F-1  

ANNEX G—BAM Parent Unitholder Consent Letter Agreement

     G-1  

ANNEX H—Management Fee Letter Agreement

     H-1  

ANNEX I—Form Of GGPOP Partnership Agreement

     I-1  

ANNEX J—Delaware General Corporation Law §  262 Appraisal Rights

     J-1  

 

xii


Table of Contents

QUESTIONS AND ANSWERS

The following are some questions that you may have regarding the proposals being considered at the special meeting and brief answers to those questions. You are urged to read carefully this entire joint proxy statement/prospectus, including the Annexes and the other documents to which this joint proxy statement/prospectus refers or which it incorporates by reference because the information in this section may not provide all the information that is important to you.

 

Q: What are the proposed transactions?

 

A: Under the terms of the merger agreement and the other Transaction Agreements, defined below, GGP will:

 

    (i) amend and restate its certificate of incorporation, which we refer to as the charter amendments, to authorize the issuance of a new series of class A stock, class B stock and class C stock, which we refer to as class A stock, class B stock and class C stock, respectively,

 

    (ii) amend and restate its bylaws, which we refer to as the bylaws amendments, and

 

    (iii) cause GGP Real Estate Holding II, Inc., which we refer to as Holding II (the general partner of GGP Operating Partnership, LP, an operating partnership of GGP, which we refer to as GGPOP), to amend and restate the agreement of limited partnership of GGPOP, which we refer to as the GGPOP partnership agreement, and which, as amended and restated, we refer to as the amended GGPOP partnership agreement.

We refer to the merger agreement and the other transaction agreements described in the section entitled “Other Transaction Agreements” beginning on page [—] of this joint proxy statement/prospectus, collectively, as the Transaction Agreements, and each, individually, as a Transaction Agreement. We refer to the series of transactions contemplated by the Transaction Agreements, including the merger agreement, as the Transactions, collectively, and each individually, as a Transaction.

Following the charter amendments, all shares of GGP common stock held by the Brookfield voting parties will be exchanged for class B stock pursuant to the class B exchange agreement, which exchange we refer to as the Brookfield affiliate exchange; and at the effective time of such Brookfield affiliate exchange, each share of GGP common stock held by subsidiaries of GGP will also be exchanged for one (1) share of class B stock.

Following the Brookfield affiliate exchange and certain transactions, including recapitalization or financing transactions as BPY may request between the date of the merger agreement and the closing of the Transactions, which we refer to collectively as the pre-closing transactions, GGP will declare a special dividend payable to the remaining GGP common stockholders (i.e., holders of those shares of GGP common stock that are not exchanged in connection with the Brookfield affiliate exchange), which we refer to as unaffiliated GGP common stockholders (not including holders of GGP common stock that is subject to vesting or forfeiture conditions, which we refer to as GGP restricted stock, but including certain deemed holders of GGP common stock in respect of any in-the-money options to purchase GGP common stock outstanding under any GGP stock plan that were granted prior to January 1, 2018, who we refer to as deemed stockholders), as of the record date of the pre-closing dividend, consisting of either cash or class A stock, at the election of such GGP common stockholders (with deemed stockholders being deemed to have elected cash) and subject to proration. We refer to such special dividend as the pre-closing dividend, the number of shares of GGP common stock that are entitled to the pre-closing dividend (which excludes shares of GGP restricted stock but includes deemed shares in respect of in-the-money options as described herein) as the pre-closing dividend share number and the shares of GGP common stock held by the unaffiliated GGP common stockholders as target shares. For illustrative examples of the proration mechanism in the event of a stock election oversubscription or a cash election oversubscription, refer to the section entitled “The Merger Agreement—Structure and Timing of the Transactions—The Pre-Closing Dividend” beginning on page [—] of this joint proxy statement/prospectus.

 

1


Table of Contents

Unaffiliated GGP common stockholders who elect to receive the pre-closing dividend in the form of class A stock will also have the option to exchange all, but not less than all, of the shares of class A stock that such holder receives or is entitled to receive as the pre-closing dividend for the limited partnership units of BPY, which we refer to as BPY units. We refer to such exchange, as described in more detail below, as the BPY unit exchange.

Following the completion of the charter amendments, the Brookfield affiliate exchange, the pre-closing transactions (if any) and the declaration of the pre-closing dividend, Goldfinch will merge with and into GGP, with GGP surviving the merger as an indirect subsidiary of BPY, which we refer to as the merger. Following the consummation of the Transactions, we refer to the surviving corporation as BPR (or the surviving corporation).

Immediately following the effective time of the merger, BPY or an affiliate of BPY will exchange shares of class A stock distributed in the pre-closing dividend and held by any unaffiliated GGP common stockholders who had made an election to receive BPY units for an equal number of BPY units in the BPY unit exchange. Each share of class A stock that BPY or its affiliate receives or is entitled to receive pursuant to the BPY unit exchange will automatically convert into class B stock at a ratio equal to the per share fair market value of class A stock so exchanged divided by the per share liquidation amount of class B stock. All shares of class A stock that are issued in the pre-closing dividend will automatically be exchanged for BPY units in the BPY unit exchange in the event that:

 

    (i) an election to receive BPY units has been made with respect to 80% or more of the shares of class A stock to be issued in the pre-closing dividend (or such event is deemed to have occurred pursuant to the terms of the merger agreement) and BPY elects to exchange all shares of class A stock that are issued in the pre-closing dividend for BPY units in the BPY unit exchange, or

 

    (ii) an election to receive BPY units has been made with respect to 90% or more of the shares of class A stock to be issued in the pre-closing dividend (or such event is deemed to have occurred pursuant to the terms of the merger agreement).

In the event that all shares of class A stock are exchanged for BPY units in the BPY unit exchange, BPR may not have any publicly traded common equity. Any shares entitled to make such an election with respect to which the payment agent has not received an effective, properly completed election form on or before 5:00 p.m., Eastern time, on the 25th day following the date when the election forms are mailed, or such other time as GGP and BPY shall agree, which we refer to as the election deadline, will be deemed to be non-electing shares. Each such non-electing share will be deemed to have made a cash election for purposes of the pre-closing dividend, and therefore will be deemed to have made an election to immediately convert to BPY units any shares of class A stock the holder receives or is entitled to receive due to proration. For further information regarding non-electing shares, refer to the section entitled “The Merger Agreement—Structure and Timing of the Transactions—The Pre-Closing Dividend” beginning on page [—] of this joint proxy statement/prospectus.

Each share of GGP common stock that is issued and outstanding immediately prior to the effective time of the merger (except for certain excluded shares of GGP common stock, which includes shares owned by BPY, Goldfinch, if any, or GGP, which we refer to collectively as cancelled shares, shares of GGP common stock for which appraisal is properly demanded, which we refer to as dissenting shares and shares of GGP restricted stock) will be cancelled and extinguished and automatically converted into the right to receive cash from BPY, without interest thereon, in an amount, which we refer to as the per share merger consideration, equal to the quotient of:

 

    (i) $9,250,000,000, less

 

    (a) the aggregate cash payment required to be made pursuant to the GGPOP partnership agreement to holders of common units of GGPOP as a result of the Transactions at any time following the Brookfield affiliate exchange through and including the effective time of the merger, which amount we refer to as the partnership common unit cash amount,

 

2


Table of Contents
    (b) the aggregate cash payment required to be made pursuant to the GGPOP partnership agreement, to holders of the LTIP units in GGPOP, which we refer to as the partnership LTIP units, as a result of the Transactions at any time following the Brookfield affiliate exchange through and including the effective time of the merger, which amount we refer to as the partnership LTIP unit cash amount,

 

    (c) the aggregate cash consideration to be paid with respect to shares of GGP restricted stock as a result of the Transactions through and including the effective time of the merger, which amount we refer to as the total GGP restricted stock cash consideration and

 

    (d) the amount designated by BPY to GGP that constitutes the aggregate amount of cash that GGP will declare as the pre-closing dividend, which amount we refer to as the aggregate cash dividend amount,

divided by

 

    (ii) the pre-closing dividend share number. We refer to the per share merger consideration multiplied by the pre-closing dividend share number as the merger consideration.

Each share of Goldfinch common stock that is outstanding immediately prior to the effective time of the merger will be converted into a number of shares of class C stock equivalent to the pre-closing dividend share number divided by the number of shares of Goldfinch common stock outstanding immediately prior to the effective time of the merger (rounded to the nearest whole share). Because all shares of Goldfinch common stock are indirectly held by BPY through an affiliate of BPY, all shares of class C stock will be indirectly held by BPY immediately following the Transactions.

 

Q: Why does GGP want to engage in the Transactions?

 

A: The Transactions provide unaffiliated GGP common stockholders with a certainty of value, as well as upside potential through ownership in a globally diversified real estate company. With an ownership interest in approximately $90 billion in total assets and annual net operating income of more than $4 billion, the combined company will be one of the world’s largest commercial real estate enterprises.

Following completion of the Transactions, unaffiliated GGP common stockholders will own approximately 26% of BPY, subsidiaries of BPY, BPR and subsidiaries of BPR, taken as a whole, which we refer to as the combined company (calculated based on all shares of class A stock having been exchanged for BPY units (and assuming all of BAM’s interests in the BPY property partnership are exchanged for BPY units) and pro forma for Brookfield Asset Management Inc.’s (which we refer to as BAM) proposed conversion of its $500 million class C junior preferred shares of a BPY subsidiary into BPY units at a price of $23.50 per unit (which we refer to as the BAM preferred share conversion)), which will possess one of the highest quality and most diverse portfolios of property globally, with an investment-grade balance sheet and strong overall financial profile. To review reasons for the Transactions in more detail, refer to the section entitled “Special Factors—Reasons for the Transactions and Recommendation of the Special Committee and the GGP Board” beginning on page [—] of this joint proxy statement/prospectus.

 

Q: Why am I receiving this joint proxy statement/prospectus?

 

A: The GGP board is using this joint proxy statement/prospectus to solicit proxies from the GGP common stockholders in connection with the Transactions, including the offering of GGP and BPY securities as consideration for the Transactions. Section 251 of the Delaware General Corporation Law, as amended, which we refer to as the DGCL, requires that notice of a meeting to approve a merger also be provided to non-voting stockholders.

In order to consummate the Transactions, the GGP common stockholders must approve the merger proposal, the charter proposals and the bylaws proposals. GGP common stockholders are also being asked to

 

3


Table of Contents

approve the compensation proposal on an advisory, non-binding basis. For additional information and definitions regarding the proposals to be presented to GGP common stockholders, refer to the section entitled “Proposals Submitted to GGP Common Stockholders” beginning on page [—] of this joint proxy statement/prospectus.

The approval of each of the merger proposal, the charter proposals and the bylaws proposals is a condition to the obligations of BPY and GGP to complete the Transactions. The approval of the compensation proposal is not a condition to the obligations of BPY and GGP to complete the Transactions.

GGP will hold the special meeting to consider and vote on such proposals. This joint proxy statement/prospectus contains important information about the Transactions and the special meeting, and you should read it carefully and in its entirety. The enclosed voting materials allow you to vote your shares of GGP common stock without attending the special meeting in person.

In connection with the Transactions and following receipt of the requisite stockholder approval, following the completion of the charter amendments, the Brookfield affiliate exchange and the pre-closing transactions (if any), GGP intends to declare the pre-closing dividend to the unaffiliated GGP common stockholders (not including holders of GGP restricted stock, but including certain holders of GGP options who are deemed stockholders), as of the record date of the pre-closing dividend, consisting of either cash or class A stock, at the election of such GGP common stockholders (with deemed stockholders being deemed to have elected cash) and subject to proration. For illustrative examples of the proration mechanism in the event of a stock election oversubscription or a cash election oversubscription, refer to the section entitled “The Merger Agreement—Structure and Timing of the Transactions—The Pre-Closing Dividend” beginning on page [—] of this joint proxy statement/prospectus.

Unaffiliated GGP common stockholders (excluding holders of GGP restricted stock or deemed stockholders) are being asked to return the enclosed election form, which permits such unaffiliated GGP common stockholders to elect:

 

    (i) whether to receive the pre-closing dividend in the form of cash or class A stock, subject to proration, and

 

    (ii) whether to exchange all class A stock such stockholder is entitled to receive in the pre-closing dividend for BPY units in the BPY unit exchange.

Holders of shares of issued and outstanding GGP common stock (excluding GGP restricted stock) who have not made a proper election by the election deadline will be deemed to be non-electing shares. Each such non-electing share will be deemed to have made a cash election for purposes of the pre-closing dividend, and therefore will be deemed to have made an election to immediately convert to BPY units any shares of class A stock the holder receives or is entitled to receive due to proration. Deemed stockholders will not make any election of the form of the pre-closing dividend with respect to shares of GGP common stock deemed held in respect of in-the-money options (as described herein). Instead, they will be deemed to have elected to receive the pre-closing dividend in cash and, unlike the holders of the non-electing shares, they will not convert to BPY units any shares of class A stock received due to proration.

We encourage you to submit a proxy to vote your shares of GGP common stock as promptly as possible so that your shares may be represented and voted at the special meeting. You may also attend the special meeting in person and cast your vote at the meeting provided that you bring an admission ticket and government-issued picture identification. For instructions on obtaining an admission ticket, refer to the section entitled “The Special Meeting—Attendance” beginning on page [—] of this joint proxy statement/prospectus.

This joint proxy statement/prospectus is also a prospectus with respect to the offering of shares of class A stock, the new series A preferred stock being issued by BPR in exchange for GGP’s pre-existing series A preferred stock, which we refer to as the new series A preferred stock, and BPY units to be issued in connection with the Transactions.

 

4


Table of Contents
Q: How does the GGP board recommend that GGP common stockholders vote?

 

A: The GGP board, following the unanimous recommendation of the special committee, has: (i) determined that the Transaction Agreements and the Transactions, including the merger, the pre-closing dividend, the charter amendments and the bylaws amendments are advisable and in the best interests of GGP and GGP common stockholders; and (ii) approved, adopted and declared advisable and in the best interests of GGP and GGP common stockholders the merger agreement, the other Transaction Agreements and the Transactions, including the merger, the pre-closing dividend, the charter amendments and the bylaws amendments.

Accordingly, the GGP board, following the unanimous recommendation of the special committee, recommends that you vote FOR the merger proposal, FOR the charter proposals, FOR the bylaws proposals, and FOR the compensation proposal. For a more complete description of the recommendation of the GGP board, refer to the section entitled “Special Factors—Reasons for the Transactions and Recommendation of the Special Committee and the GGP Board” beginning on page [—] of this joint proxy statement/prospectus.

 

Q: What will GGP common stockholders receive in the Transactions if they are consummated?

 

A: All shares of GGP common stock held by the Brookfield voting parties will be exchanged for class B stock in the Brookfield affiliate exchange and at the effective time of such Brookfield affiliate exchange and the completion of the pre-closing transactions (if any), each share of GGP common stock held by subsidiaries of GGP will also be exchanged for one (1) share of class B stock.

Following the Brookfield affiliate exchange, GGP will declare the pre-closing dividend payable to the unaffiliated GGP common stockholders (not including subsidiaries of GGP or holders of GGP restricted stock, but including certain holders of GGP options who are deemed stockholders), as of the record date of the pre-closing dividend, consisting of either:

 

    cash (rounded down to the nearest one one-thousandth (0.001)), in an amount up to $23.50 minus the per share merger consideration, or

 

    a fraction (rounded down to the nearest one one-thousandth (0.001)) of a share of class A stock equal to the quotient of (i) the difference of (a) $23.50 minus (b) the per share merger consideration divided by (ii) $23.50,

at the election of such unaffiliated GGP common stockholders (with deemed stockholders being deemed to have elected cash) and subject to proration. For illustrative examples of the proration mechanism in the event of a stock election oversubscription or a cash election oversubscription, refer to the section entitled “The Merger Agreement—Structure and Timing of the Transactions—The Pre-Closing Dividend” beginning on page [—] of this joint proxy statement/prospectus.

Each share of GGP common stock held (or deemed held) by all such unaffiliated GGP common stockholders (other than dissenting shares) will also be entitled to the per share merger consideration. Therefore, as a result of receiving the pre-closing dividend and the per share merger consideration, unaffiliated GGP common stockholders (not including the Brookfield voting parties, subsidiaries of GGP or holders of GGP restricted stock but including certain holders of GGP options who are deemed stockholders) will be entitled to receive, for each share of issued and outstanding GGP common stock and each share of GGP common stock deemed held, and subject to proration, total consideration of up to $23.50 in cash or one (1) share of class A stock, at the election of such GGP common stockholders (with deemed stockholders being deemed to have elected cash). One (1) share of class A stock is intended to provide an economic return equivalent to one BPY unit, including identical distributions, and holders of class A stock will have the right following the consummation of the Transactions to exchange each share of class A stock for one BPY unit or the cash equivalent of one BPY unit, at BPY’s election, subject to subsequent changes to the conversion factor in the event of certain dilutive or capital events of BPY or BPR. For a more detailed

 

5


Table of Contents

description of the terms of this exchange right, see “Description of Class A Stock—Exchange of Class A Stock for BPY Units” beginning on page [—] of this joint proxy statement/prospectus. The rights of holders of class A stock will be governed by the amended charter and the amended bylaws, the forms of which are attached to this joint proxy statement/prospectus as Annex B and Annex C, respectively.

Immediately following the effective time of the merger, BPY or an affiliate of BPY will exchange BPY units for an equal number of shares of class A stock issued or issuable as the pre-closing dividend with any unaffiliated GGP common stockholders who had made an election to receive BPY units in the BPY unit exchange. In the event that:

 

    (i) an election to receive BPY units has been made with respect to 80% or more of the shares of class A stock to be issued in the pre-closing dividend (or such event is deemed to have occurred pursuant to the terms of the merger agreement) and BPY elects to exchange all shares of class A stock that are issued in the pre-closing dividend for BPY units in the BPY unit exchange, or

 

    (ii) an election to receive BPY units has been made with respect to 90% or more of the shares of class A stock to be issued in the pre-closing dividend (or such event is deemed to have occurred pursuant to the terms of the merger agreement), then all shares of class A stock that are issued in the pre-closing dividend will automatically be exchanged for BPY units in the BPY unit exchange.

Holders of shares of issued and outstanding GGP common stock (excluding GGP restricted stock) who have not made a proper election by the election deadline will be deemed to be non-electing shares. Each such non-electing share will be deemed to have made a cash election for purposes of the pre-closing dividend, and therefore will be deemed to have made an election to immediately convert to BPY units any shares of class A stock received or is entitled to receive due to proration. Deemed stockholders will not make any election of the form of the pre-closing dividend with respect to shares of GGP common stock deemed held in respect of in-the-money options (as described herein). Instead, they will be deemed to have elected to receive the pre-closing dividend in cash and, unlike the holders of the non-electing shares, they will not convert to BPY units any shares of class A stock the holder receives or is entitled to receive due to proration.

For additional information regarding the total consideration to be paid to unaffiliated GGP common stockholders in connection with the Transactions, refer to the sections entitled “The Merger Agreement—Structure and Timing of the Transactions—The Pre-Closing Dividend” and “The Merger Agreement—Structure and Timing of the Transactions—The Merger” beginning on pages [—] and [—] of this joint proxy statement/prospectus, respectively. For additional information regarding class A stock and BPY units, refer to the section entitled “Comparison of Rights of Holders of GGP Common Stock, Class A Stock and BPY Units” beginning on page [—] of this joint proxy statement/prospectus.

 

Q: How does the proration mechanism affect the ratio of cash and class A stock or BPY units that I receive in connection with the pre-closing dividend?

 

A: The aggregate cash dividend amount is equal to $9,250,000,000 reduced by (i) the merger consideration, (ii) the partnership common unit cash amount, (iii) the partnership LTIP unit cash amount and (iv) the total GGP restricted stock cash consideration. The maximum cash amount that one (1) share of GGP common stock may receive in the pre-closing dividend, which we refer to as the maximum per share cash dividend, is equal to $23.50 minus the per share merger consideration.

If the product of (i) the maximum per share cash dividend and (ii) the number of shares of GGP common stock that elect to receive cash in the pre-closing dividend exceeds the aggregate cash dividend amount, holders of such shares of GGP common stock will instead receive a prorated amount of cash. Such holders will receive, per share of GGP common stock, a fraction of class A stock or a BPY unit, in each case equal to (i)(a) the maximum per share cash dividend minus (b) the prorated cash dividend divided by (ii) $23.50. The greater the oversubscription of the cash election, the less cash and more class A stock (or BPY units) an unaffiliated GGP common stockholder making the cash election will receive. Reciprocally, the greater the

 

6


Table of Contents

oversubscription of the stock election, the fewer shares of class A stock (or BPY units) and more cash an unaffiliated GGP common stockholder making the stock election will receive. For more detailed illustrative examples of the proration mechanism in the event of a stock election oversubscription or a cash election oversubscription, refer to the section entitled “The Merger Agreement—Structure and Timing of the Transactions—The Pre-Closing Dividend” beginning on page [—] of this joint proxy statement/prospectus.

Example #1: The aggregate cash dividend amount is $8,800,000,000, the pre-closing dividend share number is 650,000,000 and the per share merger consideration is $0.20. In this scenario, the maximum per share cash dividend is $23.30. If holders of 600,000,000 shares elect to receive the pre-closing dividend in cash, they will receive a cash dividend of $14.66 per share. Such holders will also receive 0.367 share of class A stock or BPY units per share of GGP common stock.

Alternatively, if the product of (i) the maximum per share cash dividend and (ii) the number of shares of GGP common stock that elect to receive cash is lower than the aggregate cash dividend amount, holders that elected to receive class A stock will instead receive a prorated amount of cash that depletes the aggregate cash dividend amount.

Example #2: The same facts as Example #1, except that holders of 100,000,000 shares elect to receive the pre-closing dividend in cash. In this example, there will be $6,470,000,000 of cash left to distribute in the pre-closing dividend to the holders of the remaining 550,000,000 shares. The holders of the remaining 550,000,000 shares will each receive a cash dividend of $11.785 per share (calculated in accordance with the intermediary steps and rounding requirements as described in the section entitled “The Merger AgreementStructure and Timing of the Transactions—The Pre-Closing Dividend” beginning on page [—] of this joint proxy statement/prospectus). Such holders will also receive 0.49 share of class A stock or BPY units per share of GGP common stock.

The numbers in the above examples were chosen for ease of calculation and are not intended to represent the actual or estimated aggregate cash dividend amount, pre-closing dividend share number, per share merger consideration or how many holders elect to receive the cash dividend. Additionally, the proration is subject to rounding as described above in “—What will GGP common stockholders receive in the Transactions if they are consummated?” Refer to the section entitled “The Merger Agreement—Structure and Timing of the Transactions—The Pre-Closing Dividend” beginning on page [—] of this joint proxy statement/prospectus for more information on the above illustrative examples.

 

Q: How and when will the aggregate cash dividend amount and the per share merger consideration be determined?

 

A: The aggregate cash dividend amount will be determined in accordance with the merger agreement based on a variety of factors, some of which will not be known until closer to the time of the charter amendments closing. Such factors include, among other things, the amount of cash that is required to be paid to holders of derivative and convertible securities of GGP and GGPOP and the timing and availability of proceeds to be received as part of the pre-closing transactions.

With respect to sequencing of determination of the aggregate cash dividend amount and the per share merger consideration, the aggregate cash dividend amount will be determined first and must be designated by BPY to GGP in writing at least two (2) business days prior to the charter amendments closing. BPY’s determination will be based in part on and consistent with BPY’s then-current estimate of an amount, which we refer to as the total cash amount, which is equal to the difference of $9,250,000,000 that is to be paid to securityholders in connection with the Transactions, less the partnership common unit cash amount, less the partnership LTIP unit cash amount, less the total GGP restricted stock cash consideration.

Any cash consideration to be paid to securityholders in connection with the Transactions that is not paid as part of the pre-closing dividend will instead be paid in the form of merger consideration. As of the effective time of the merger, BPY and GGP will determine the total cash amount. Following determination of the total cash amount, BPY and GGP will then determine the per share merger consideration, which is equal to

 

7


Table of Contents

the quotient of (i) the total cash amount minus the aggregate cash dividend amount divided by (ii) the pre-closing dividend share number.

 

Q: How do I calculate the value of the total consideration received in connection with the Transactions?

 

A: Unaffiliated GGP common stockholders (not including holders of dissenting shares, subsidiaries of GGP or holders of GGP restricted stock but including certain holders of GGP options who are deemed stockholders) will be entitled to receive, for each share of issued and outstanding GGP common stock, and subject to proration, total consideration of up to $23.50 in cash or one (1) share of class A stock, at the election of such GGP common stockholders (with deemed stockholders being deemed to have elected cash). For illustrative examples of the proration mechanism in the event of a stock election oversubscription or a cash election oversubscription, refer to the section entitled “The Merger Agreement—Structure and Timing of the Transactions—The Pre-Closing Dividend” beginning on page [—] of this joint proxy statement/prospectus. Class A stock received in connection with the Transactions may be immediately exchanged for BPY units.

One (1) share of class A stock is intended to provide an economic return equivalent to one BPY unit, including identical distributions, and holders of class A stock will have the right following the consummation of the Transactions to exchange each share of class A stock for one BPY unit or the cash equivalent of one BPY unit, at BPY’s election, subject to subsequent changes to the conversion factor in the event of certain dilutive or capital events of BPY or BPR. For a more detailed description of the terms of this exchange right, see “Description of Class A Stock—Exchange of Class A Stock for BPY Units” beginning on page [—] of this joint proxy statement/prospectus. The rights of holders of class A stock will be governed by the amended charter and the amended bylaws, the forms of which are attached to this joint proxy statement/prospectus as Annex B and Annex C, respectively. The value of the class A stock received by unaffiliated GGP common stockholders in connection with the Transactions will depend on the value of the class A stock following the consummation of the Transactions. Prior to the Transactions, there has not been and will not be established public trading for class A stock. The price of class A stock following the Transactions will be unknown until the commencement of trading following completion of the Transactions. It is expected that the class A stock will be listed on the NASDAQ Stock Market, which we refer to as the NASDAQ.

BPY units are publicly traded on the NASDAQ and the Toronto Stock Exchange, which we refer to as the TSX, under the trading symbols “BPY” and “BPY.UN,” respectively. As such, the value of BPY units that an unaffiliated GGP common stockholder receives may be determined from publicly available information.

 

Q: What are the principal U.S. federal income tax consequences of the pre-closing dividend, the merger and the BPY unit exchange to U.S. unaffiliated GGP common stockholders?

 

A: The pre-closing dividend (whether in cash or class A stock) is expected to be treated as a dividend for U.S. federal income tax purposes to the extent it is paid out of GGP’s earnings and profits, which is expected to include a substantial amount of capital gain that is expected to be recognized as a result of the pre-closing transactions entered into after the Brookfield affiliate exchange. To the extent the pre-closing dividend exceeds GGP’s earnings and profits, it is expected to be treated as a non-taxable return of capital which will reduce an unaffiliated GGP common stockholder’s tax basis in its GGP common stock to the extent the unaffiliated GGP common stockholder has adjusted tax basis in its GGP common stock, and to the extent it exceeds the unaffiliated GGP common stockholder’s adjusted tax basis, is expected to result in gain being recognized by such unaffiliated GGP common stockholder. The conversion of shares of GGP common stock held by unaffiliated GGP common stockholders into the right to receive the merger consideration in the merger, and the exchange of class A stock for BPY units at the election of an unaffiliated GGP common stockholder, are each expected to result in gain or loss being recognized by the unaffiliated GGP common stockholder. However, certain aspects of the tax consequences of the Transactions are not entirely clear, and each GGP common stockholder is strongly urged to consult its tax advisor regarding the potential U.S. federal income tax consequences to it of the Transactions.

 

8


Table of Contents

For a more complete discussion of the U.S. federal income taxation of the pre-closing dividend, the merger, the ownership of class A stock, the BPY unit exchange, the ownership of BPY units, refer to the section entitled “Material U.S. Federal Income Tax Considerations and Consequences” beginning on page [—] of this joint proxy statement/prospectus and the risks related to taxation in the section entitled “Risk Factors” beginning on page [—] of this joint proxy statement/prospectus.

THE U.S. FEDERAL INCOME TAX RULES APPLICABLE TO THE TRANSACTIONS AND TO THE OWNERSHIP OF STOCK OF REAL ESTATE INVESTMENT TRUSTS, WHICH WE REFER TO AS REITS, AND BPY UNITS GENERALLY ARE HIGHLY TECHNICAL AND COMPLEX. HOLDERS OF SHARES OF GGP COMMON STOCK AND HOLDERS OF BPY UNITS ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE TRANSACTIONS, THE OWNERSHIP OF CLASS A STOCK, AND BPR’S QUALIFICATION AS A REIT FOLLOWING THE MERGER, AND THE OWNERSHIP OF BPY UNITS, INCLUDING THE APPLICABILITY AND EFFECT OF U.S. FEDERAL, STATE, LOCAL AND NON-U.S. INCOME AND OTHER TAX LAWS, AND POTENTIAL CHANGES IN APPLICABLE TAX LAWS, IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES.

 

Q: Who are BPY and BPR?

 

A: BPY is one of the world’s largest commercial real estate companies, with approximately $68 billion in total assets. BPY is a leading owner, operator and investor in commercial real estate, with a diversified portfolio of premier office and retail assets, as well as interests in multifamily, triple net lease, industrial, hospitality, self-storage, student housing and manufactured housing assets. BPY, together with the Brookfield voting parties, beneficially owns approximately 34% of GGP common stock as of the date of this joint proxy statement/prospectus. In connection with the charter amendments, the surviving corporation’s name will be changed to Brookfield Property REIT Inc. (i.e., BPR), which will be a publicly traded U.S. REIT and will issue class A stock that is intended to provide economic equivalence to an investment in BPY, its parent company. It is expected that BPY and BPR will share a management team and board of directors, and have an identical distribution policy. Together, BPY and BPR will be the flagship listed real estate company of BAM, a leading global alternative asset manager with over $285 billion in assets under management.

 

Q: How will my rights as a holder of class A stock or BPY units following the Transactions differ from my current rights as a holder of GGP common stock?

 

A: In connection with the Transactions, GGP will file the amended charter with the Secretary of State of the State of Delaware, a form of which is attached as Annex B to this joint proxy statement/prospectus. GGP will also adopt the amended bylaws, a form of which is attached as Annex C to this joint proxy statement/prospectus. For a description of the material differences in holding a share of GGP common stock, a share of class A stock and a BPY unit, refer to the section entitled “Comparison of Rights of Holders of GGP Common Stock, Class A Stock and BPY Units” beginning on page [—] of this joint proxy statement/prospectus for additional information.

 

Q: When and where is the special meeting?

 

A: The special meeting will be held at GGP’s principal executive offices located at 350 N. Orleans St., Suite 300, Chicago, Illinois 60654-1607, on [—], commencing at [—] (Chicago time).

 

Q: Who can vote at the special meeting?

 

A:

All holders of record of GGP common stock as of the close of business on June [—], 2018, the special meeting record date, are entitled to receive notice of and to vote at the special meeting. As of the special

 

9


Table of Contents
  meeting record date, there were [—] shares of GGP common stock outstanding and entitled to vote at the special meeting, held by approximately [—] holders of record. Each holder of GGP common stock is entitled to one vote on each proposal presented at the special meeting for each share of GGP common stock that such holder owned on the special meeting record date.

 

Q: What constitutes a quorum for purposes of the special meeting?

 

A: The holders of record on the special meeting record date (as described in the section entitled “The Special Meeting—Record Date; Who Can Vote at the Special Meeting” beginning on page [—] of this joint proxy statement/prospectus) of a majority of the shares of GGP common stock outstanding on the special meeting record date present in person or represented by proxy will constitute a quorum at the special meeting. All shares of GGP common stock, represented in person or by proxy, including abstentions, will be treated as present for purposes of determining the presence or absence of a quorum for all matters voted on at the special meeting. Broker non-votes will be counted as present for the purpose of determining the existence of a quorum at the special meeting so long as a stockholder has given the broker or other nominee voting instructions on at least one of the proposals set forth in this joint proxy statement/prospectus. As the proposals set forth in this joint proxy statement/prospectus are considered “non-routine” matters under NYSE Rule 452, a stockholder’s shares will not be considered broker non-votes and will not be counted as present for the purpose of determining the existence of a quorum if no instructions have been provided on how to vote on any of the proposals set forth in this joint proxy statement/prospectus.

For a more detailed description of what constitutes a quorum for purposes of the special meeting, refer to the section entitled “The Special Meeting” beginning on page [—] of this joint proxy statement/prospectus.

 

Q: What vote is required to approve the proposals at the special meeting?

 

A: Adoption of the merger proposal requires the affirmative vote of the holders of a majority of the outstanding shares of GGP common stock, and the affirmative vote of the holders of a majority of the outstanding target shares. Adoption of each of the charter proposals and the bylaws proposals requires the affirmative vote of the holders of at least 66-2/3% of the outstanding shares of GGP common stock. Certain affiliates of BPY who collectively beneficially own shares of GGP common stock representing, in the aggregate, approximately 34% of the total outstanding GGP common stock as of the date of the merger agreement have entered into the voting agreement with GGP to vote their shares of GGP common stock in favor of the merger proposal, the charter proposals and the bylaws proposals. If you abstain or fail to vote your shares in favor of the merger proposal, charter proposals and bylaws proposals, including broker non-votes, this will have the same effect as a vote AGAINST such proposals. The Transactions will not be completed unless the merger proposal, the charter proposals and the bylaws proposals are so approved.

Approval of the compensation proposal requires the affirmative vote of the holders of a majority of the shares of GGP common stock present in person or represented by proxy at the special meeting and entitled to vote on such proposal. Abstentions will have the same effect as votes “AGAINST” this proposal. Failures to vote and broker non-votes will have no effect on the approval of this proposal if a quorum is present.

Your vote is important. We encourage you to submit a proxy to vote your shares of GGP common stock as promptly as possible so that your shares may be represented and voted at the special meeting. You may also attend the special meeting in person and cast your vote at the meeting provided that you bring an admission ticket and government-issued picture identification. For instructions on obtaining an admission ticket, refer to the section entitled “The Special Meeting—Attendance” beginning on page [—] of this joint proxy statement/prospectus.

 

Q: What is the difference between holding shares as a stockholder of record and as a beneficial owner?

 

A:

If your shares are registered directly in your name with American Stock Transfer & Trust Company, LLC, the transfer agent of GGP, you are considered the stockholder of record with respect to those shares. As the

 

10


Table of Contents
  stockholder of record, you have the right to vote by granting your voting rights directly to GGP or to a third party or by voting in person at the special meeting.

If your shares are held by a broker or other nominee, you are considered the beneficial owner of shares held in “street name,” and your broker or other nominee is considered the stockholder of record with respect to those shares. Your broker or other nominee should send you, as the beneficial owner, a package describing the procedure for voting your shares. You should follow the instructions provided by them to vote your shares. You are invited to attend the special meeting; however, you may not vote these shares in person at the special meeting unless you obtain a “legal proxy” from your broker or other nominee that holds your shares, giving you the right to vote the shares at the meeting. Obtaining a legal proxy may take several days and such legal proxy must be obtained prior to your attending the special meeting in order to vote your shares at that meeting.

For more information, refer to the section entitled “The Special Meeting—Stockholders of Record and Beneficial Owners” beginning on page [—] of this joint proxy statement/prospectus.

 

Q: If my shares of GGP common stock are held in “street name” by my broker or other nominee, will my broker or other nominee vote my shares of GGP common stock for me?

 

A: Unless you instruct your broker or other nominee how to vote your shares of GGP common stock held in “street name,” your shares will NOT be voted.

If your shares are held by a broker or other nominee, you must provide your broker or other nominee with instructions on how to vote your shares. Please follow the voting instructions provided by your broker or other nominee. You should also be aware that you may not vote shares of GGP common stock held in “street name” by returning a proxy card directly to GGP or by voting in person at the special meeting unless you provide a “legal proxy,” which you must obtain from your broker or other nominee.

Brokers and other nominees are precluded from exercising their voting discretion with respect to approving “non-routine” matters under NYSE Rule 452, such as the merger proposal, the charter proposals, the bylaws proposals and the compensation proposal, and, as a result, absent specific instructions from the beneficial owner of such shares of GGP common stock, brokers or other nominees are not empowered to vote those shares of GGP common stock on any of the proposals to be considered at the special meeting. If you do not provide instructions on how to vote your shares on any of the proposals set forth in this joint proxy statement/prospectus, those shares will not be considered broker non-votes and will not be counted as present for the purpose of determining the existence of a quorum. If you provide voting instructions on at least one, but not all, of the proposals set forth in this joint proxy statement/prospectus, your shares will be counted as present for the purpose of determining the existence of a quorum.

Consequently, if no voting instructions were given with respect to each of the following proposals, broker non-votes will have the same effect as votes AGAINST the merger proposal, the charter proposals and the bylaws proposals, but will have no effect on the compensation proposal.

 

Q: What happens if I abstain or fail to vote?

 

A: For purposes of the special meeting, an abstention occurs when a stockholder attends the special meeting in person and does not vote or returns a proxy with an “ABSTAIN” vote, or, if you hold your shares through a broker or other nominee, you instruct your broker or other nominee to abstain from voting your shares. If you:

 

    abstain or fail to vote with respect to any of the merger proposal, charter proposals and bylaws proposals, it will have the same effect as a vote AGAINST the merger proposal, charter proposals and bylaws proposals and, consequently, the Transactions, including the merger; and

 

    abstain with respect to the compensation proposal, assuming a quorum is present, it will have the same effect as a vote “AGAINST” the compensation proposal.

 

11


Table of Contents
Q: Must I vote in favor of the proposals being considered at the special meeting in order to receive the pre-closing dividend?

 

A: Regardless of whether and how you vote on any of the proposals being considered at the special meeting, you will be entitled to receive the pre-closing dividend if you are otherwise eligible to receive the pre-closing dividend in accordance with the terms of the merger agreement.

 

Q: What happens if I fail to make an election with respect to the form of the pre-closing dividend?

 

A: Any shares entitled to make such an election with respect to which the payment agent has not received an effective, properly completed election form on or before the election deadline will be deemed to be non-electing shares. Each such non-electing share will be deemed to have made a cash election for purposes of the pre-closing dividend, and will be deemed to have made an election to immediately convert to BPY units any shares of class A stock received or is entitled to receive due to proration. Deemed stockholders will not make any election of the form of the pre-closing dividend with respect to shares of GGP common stock deemed held in respect of in-the-money options (as described herein). Instead, they will be deemed to have elected to receive the pre-closing dividend in cash and, unlike the holders of the non-electing shares, they will not convert to BPY units any shares of class A stock the holder receives or is entitled to receive due to proration. For illustrative examples of the proration mechanism in the event of a stock election oversubscription or a cash election oversubscription, refer to the section entitled “The Merger Agreement—Structure and Timing of the Transactions—The Pre-Closing Dividend” beginning on page [—] of this joint proxy statement/prospectus.

 

Q: When are the Transactions expected to close?

 

A: Subject to the satisfaction or waiver of the closing conditions described under the section entitled “The Merger Agreement—Conditions to Consummation of the Charter Amendments, the Bylaws Amendments, the Partnership Agreement Amendment and Restatement and the Merger” beginning on page [—] of this joint proxy statement/prospectus, including the receipt of the requisite stockholder approval, GGP expects that the Transactions will be completed in the third quarter of 2018. However, it is possible that factors outside the control of the parties could result in the Transactions being completed at a later time or not at all. There may be a substantial amount of time between the special meeting and the completion of the Transactions.

 

Q: What are the conditions to the completion of the Transactions?

 

A: In addition to the requisite stockholder approval described above, completion of the Transactions is subject to the satisfaction or waiver of a number of other conditions, including:

 

    consent of the holders of a majority of BPY units for the issuance of BPY units in the BPY unit exchange, unless BPY has obtained a determination from the TSX in writing that such consent is not required;

 

    absence of any court or other governmental authority of competent jurisdiction enacting any law, ruling or other legal requirement that is in effect and prohibits consummation of any Transaction;

 

    effectiveness of the registration statement of which this joint proxy statement/prospectus forms a part and the absence of (i) any stop order issued by the SEC suspending the effectiveness of this joint proxy statement/prospectus that is in effect or (ii) any proceeding initiated by the SEC seeking such a stop order that has not been withdrawn;

 

   

effectiveness of one or more shelf registration statements registering (i) the issuance of BPY units issuable in the event that an affiliate of BPY elects to deliver BPY units in satisfaction of the exchange rights of the holders of class A stock contained in the amended charter and (ii) the resale of BPY units

 

12


Table of Contents
 

transferred by BAM in accordance with the terms of the Rights Agreement, dated as of April 27, 2018, by and between BAM and Wilmington Trust, National Association, which is being filed as an exhibit to this joint proxy statement/prospectus and is incorporated by reference herein, and which we refer to as the rights agreement, and, in each case, the absence of (a) any stop order issued by the SEC suspending the effectiveness of such shelf registration statements that is in effect and (b) any proceeding initiated by the SEC seeking such a stop order that has not been withdrawn (provided that this condition need not be satisfied if all shares of class A stock issued in the pre-closing dividend are exchanged for BPY units in the BPY unit exchange);

 

    the BPY units to be issued in the BPY unit exchange have been authorized for listing on the TSX and the NASDAQ, subject to official notice of issuance;

 

    the class A stock to be issued in the Transactions has been authorized for listing on the NASDAQ or the New York Stock Exchange, which we refer to as the NYSE (BPY and GGP anticipate that the class A stock will be listed on the NASDAQ), subject to official notice of issuance (provided that this condition need not be satisfied if all shares of class A stock issued in the pre-closing dividend are exchanged for BPY units in the BPY unit exchange) (refer to the section entitled “Special Factors—Listing of Class A Stock” beginning on page [—] of this joint proxy statement/prospectus);

 

    accuracy of representations and warranties under the merger agreement (subject to certain materiality exceptions);

 

    compliance with and performance in all material respects by GGP, BPY and Goldfinch of their respective obligations under the merger agreement;

 

    absence of a material adverse effect on GGP or BPY;

 

    receipt by GGP of (i) an opinion of counsel regarding certain tax matters, including BPY’s qualification and taxation as a partnership for U.S. federal income tax purposes; and (ii) an opinion of a nationally recognized valuation firm regarding the solvency of BPR following the Transactions after giving effect to the Transactions;

 

    receipt by BPY of an opinion of counsel regarding certain tax matters, including GGP’s qualification and taxation as a REIT for U.S. federal income tax purposes; and

 

    the rights agreement will have been executed and will be in full force and effect.

On May 24, 2018, BPY filed shelf registration statements on Form F-3 with the SEC to register BPY units deliverable to holders of class A stock in satisfaction of the exercise of the exchange rights contained in the amended charter and the rights agreement. As noted above, such registration statements are required to become effective at or prior to the completion of the Transactions.

For a more complete summary of the conditions that must be satisfied or waived prior to the completion of the Transactions, refer to the section entitled “The Merger Agreement—Conditions to Consummation of the Charter Amendments, the Bylaws Amendments, the Partnership Agreement Amendment and Restatement and the Merger” beginning on page [—] of this joint proxy statement/prospectus.

 

Q: What will happen to outstanding GGP equity awards in the Transactions?

 

A: The below chart summarizes the treatment of outstanding GGP equity awards in the Transactions.

 

Type of Equity Award

  

Summary of Treatment

GGP in-the-money options*

   Generally will be deemed to be net settled for a number of shares of GGP common stock that will be deemed to have elected to receive cash for purposes of the pre-closing dividend, and will receive cash (and, if the pre-closing dividend cash consideration is

 

13


Table of Contents

Type of Equity Award

  

Summary of Treatment

   prorated in accordance with the merger agreement, shares of class A stock) pursuant to the pre-closing dividend and the per share merger consideration.

GGP out-of-the-money options

   Generally will be converted into equivalent options to purchase BPY units.

Shares of GGP restricted stock granted prior to January 1, 2018

  

 

Generally will be cancelled and converted (with any performance conditions deemed met at target) into the right to receive cash and restricted shares of class A stock, which cash and restricted shares will have an aggregate value determined based on the value of the pre-closing dividend (assuming that every share makes a cash election and the form of consideration is prorated in accordance with the merger agreement) and the per share merger consideration.

Shares of GGP restricted stock granted in 2018

   Generally will be converted into equivalent restricted shares of class A stock (with any performance conditions deemed met at target).

GGP FV LTIPs (which are full value partnership LTIP units of GGPOP)

  

 

Generally will be subject to treatment comparable to shares of GGP restricted stock granted in 2018. GGP FV LTIPs that continue after the Transactions will be convertible into GGPOP series K preferred units (which are exchangeable for shares of class A stock).

GGP AO LTIPs (which are appreciation-only partnership LTIP units of GGPOP)

  

 

Generally will be subject to treatment comparable to GGP out-of-the-money options. GGP AO LTIPs that continue after the Transactions will be convertible into GGPOP series K preferred units (which are exchangeable for shares of class A stock).

 

* GGP in-the-money options are options to purchase shares of GGP common stock granted prior to January 1, 2018 that have an exercise price less than the aggregate value of the pre-closing dividend and per share merger consideration.

Converted options, restricted shares, GGP FV LTIPs and GGP AO LTIPs will remain subject to the same service-based vesting conditions as applied to the underlying GGP equity award, except that the converted awards will fully vest upon a termination of the holder’s employment without “cause” (as defined in the applicable award agreement) or for “good reason” (as defined in the merger agreement) within two (2) years following the effective time of the merger.

GGP equity awards that are governed by existing “single-trigger” change in control provisions or that are held by recently hired or departed executives generally will be governed by their existing terms.

For additional information on the effect of the Transactions on the GGP equity awards, refer to the section entitled “Special Factors—Interests of GGP’s Directors and Executive Officers in the Transactions—Treatment of GGP Equity Awards,” beginning on page [—] of this joint proxy statement/prospectus.

 

14


Table of Contents
Q: Where will my shares of class A stock be publicly traded?

 

A: BPY and GGP anticipate that the class A stock will be listed on the NASDAQ upon the consummation of the Transactions under the trading symbol “BPR.”

 

Q: Where will my shares of new series A preferred stock be publicly traded?

 

A: BPY and GGP anticipate that the new series A preferred stock will be listed on the NASDAQ upon the consummation of the Transactions under the trading symbol “BPRAP.”

 

Q: Who will serve on the BPR board following the Transactions?

 

A: Under the terms of the merger agreement, as of the effective time of the merger, the BPR board will consist of the directors selected by BPY, which directors will be approved by the GGP board prior to the effective time of the merger. BPY has not yet made any such selections. It is expected that the current members of the board of directors of the general partner of BPY, which we refer to as the BPY general partner, will comprise the BPR board after the effective time of the merger.

 

Q: Are GGP common stockholders entitled to appraisal rights?

 

A: GGP common stockholders are entitled to exercise appraisal rights solely in connection with the merger. All GGP common stockholders who do not vote in favor of the merger proposal and who properly and validly perfect their statutory rights of appraisal in respect of such GGP common stock in accordance with Section 262 of the DGCL shall not receive the merger consideration.

Instead, such stockholders shall be entitled to receive payment of the appraised value of such GGP common stock. Subject to the terms and conditions set forth in the voting agreement, each of the Brookfield voting parties has waived, to the fullest extent permitted by law, and agreed not to assert, exercise or perfect any appraisal rights (including pursuant to Section 262 of the DGCL or otherwise) in connection with the Transactions, with respect to any and all shares of GGP common stock held by it of record or beneficially owned. Refer to the section entitled “Other Transaction Agreements—The Voting Agreement” beginning on page [—] of this joint proxy statement/prospectus.

For more information, refer to the section entitled “Appraisal Rights in the Merger” beginning on page [—] of this joint proxy statement/prospectus.

 

Q: Why am I being asked to consider and vote on a proposal to approve, by non-binding, advisory vote, the compensation that may become payable to the GGP named executive officers in connection with the Transactions?

 

A: Under SEC rules, GGP is required to seek a non-binding, advisory vote from GGP common stockholders with respect to the compensation that may become payable to its named executive officers in connection with the Transactions. Refer to the section entitled “Proposals Submitted to GGP Common Stockholders—Proposal 6—The Compensation Proposal” beginning on page [—] of this joint proxy statement/prospectus.

 

Q: What will happen if GGP common stockholders do not approve the compensation proposal?

 

A: Approval of the GGP compensation proposal is not a condition to the completion of the Transactions. Accordingly, you may vote against the compensation proposal and vote in favor of the merger proposal and any other proposals. The vote on the compensation proposal is an advisory vote being presented only to GGP common stockholders and it will not be binding on BPR or BPY following the Transactions. If the Transactions are completed, any merger-related compensation may be paid to the GGP named executive officers to the extent payable in accordance with the terms of their compensation agreements and arrangements even if GGP common stockholders do not approve the compensation proposal.

 

15


Table of Contents
Q: Do any of GGP’s directors or executive officers have interests in the Transactions that may differ from those of GGP common stockholders?

 

A: Certain GGP directors and executive officers have interests in the Transactions that are different from, or in addition to, their interests as GGP common stockholders. The special committee, comprised entirely of non-management independent directors who are not affiliated with BPY, was aware of and considered these interests, among other matters, in evaluating the merger agreement and the Transactions and recommended unanimously that the GGP board recommend that the GGP common stockholders vote FOR the merger proposal, FOR the charter proposals, FOR the bylaws proposals and FOR the compensation proposal. The GGP board was also aware of and considered these interests, among other matters, in evaluating the merger agreement and the other Transaction Agreements, the Transactions and the recommendation of the special committee. For a description of these interests, refer to the section entitled “Special Factors—Interests of GGP’s Directors and Executive Officers in the Transactions” beginning on page [—] of this joint proxy statement/prospectus.

 

Q: Where can I find the voting results of the special meeting?

 

A: The preliminary voting results of the special meeting will be announced at the special meeting. In addition, within four (4) business days following certification of the final voting results, GGP intends to file its final voting results with the SEC on a Current Report on Form 8-K.

 

Q: What do I need to do now?

 

A: After you have carefully read this joint proxy statement/prospectus, please respond by completing, signing and dating your election form (if applicable) and proxy card or voting instruction card and returning them in the enclosed postage-paid return envelope or, if available, by authorizing your proxy by one of the other methods specified in your proxy card or voting instruction card as promptly as possible so that your shares of GGP common stock will be represented and voted at the special meeting.

Refer to your proxy card or voting instruction card forwarded by your broker or other nominee to see which voting options are available to you.

The method by which you submit a proxy will in no way limit your right to vote at the special meeting if you later decide to attend the meeting in person. However, if your shares of GGP common stock are held in the name of a broker or other nominee, you must obtain a “legal proxy,” executed in your favor, from your broker or other nominee, to be able to vote in person at the special meeting. Obtaining a legal proxy may take several days and such legal proxy must be obtained prior to your attending the special meeting in order to vote your shares at that meeting.

 

Q: Do I need to do anything with my stock certificates now?

 

A: No. Promptly following and no later than the fifth (5th) business day following the effective time of the merger, BPY and BPR will cause the payment agent to mail to each holder of record whose shares of GGP common stock were converted into the right to receive the merger consideration a letter of transmittal in customary form and instructions for use in effecting the surrender of its certificates and uncertificated shares, as applicable. Refer to the section entitled “The Merger Agreement—Exchange of Shares and the Escrow Arrangement” beginning on page [—] of this joint proxy statement/prospectus.

 

Q: If I give a proxy, how will my proxy be voted?

 

A:

All shares of GGP common stock entitled to vote and represented by properly completed proxies received prior to the special meeting, and not revoked, will be voted at the special meeting as instructed on the proxies. You may vote “FOR,” “AGAINST” or “ABSTAIN” with respect to any proposal. If you are a stockholder of record and you properly sign, date and return a proxy card but do not indicate how your

 

16


Table of Contents
  shares of GGP common stock should be voted on a proposal, the shares of GGP common stock represented by your proxy will be voted as the GGP board recommends and therefore FOR the merger proposal, FOR the charter proposals, FOR the bylaws proposals and FOR the compensation proposal.

 

Q: What election options are available to me?

 

A: If you are a holder of record or a beneficial owner of GGP common stock on the record date for the pre-closing dividend, you may elect (i) whether to receive the pre-closing dividend in the form of cash or class A stock, subject to proration, and (ii) whether to exchange all class A stock you are entitled to receive in the pre-closing dividend for BPY units in the BPY unit exchange. For illustrative examples of the proration mechanism in the event of a stock election oversubscription or a cash election oversubscription, refer to the section entitled “The Merger Agreement—Structure and Timing of the Transactions—The Pre-Closing Dividend” beginning on page [—] of this joint proxy statement/prospectus.

 

Q: How do I vote or make an election?

 

A: If you are a holder of record of GGP common stock (other than GGP restricted stock), you may have your shares of GGP common stock voted on matters presented at the special meeting by proxy (via the Internet, by telephone or by signing, dating and returning the accompanying proxy card in the enclosed postage-paid return envelope) or in person. If you are a beneficial owner of GGP common stock, you should receive instructions from your broker or other nominee that you must follow in order to have your shares of GGP common stock voted.

If you are a holder of record or a beneficial owner of GGP common stock on the record date for the pre-closing dividend, you may elect (i) whether to receive the pre-closing dividend in the form of cash or class A stock, subject to proration, and (ii) whether to exchange all class A stock you are entitled to receive in the pre-closing dividend for BPY units in the BPY unit exchange. This election may be made by completing and returning the accompanying election form in the enclosed postage-paid return envelope, and you may request an additional election form from GGP or the payment agent. For illustrative examples of the proration mechanism in the event of a stock election oversubscription or a cash election oversubscription, refer to the section entitled “The Merger Agreement—Structure and Timing of the Transactions—The Pre-Closing Dividend” beginning on page [—] of this joint proxy statement/prospectus.

Holders of shares of issued and outstanding GGP common stock (excluding GGP restricted stock) who have not made a proper election by the election deadline will be deemed to be non-electing shares. Each such non-electing share will be deemed to have made a cash election for purposes of the pre-closing dividend, and therefore will be deemed to have made an election to immediately convert to BPY units any shares of class A stock received or is entitled to receive due to proration. Deemed stockholders will not make any election of the form of the pre-closing dividend with respect to shares of GGP common stock deemed held in respect of in-the-money options (as described herein).

Instead, they will be deemed to have elected to receive the pre-closing dividend in cash and, unlike the holders of the non-electing shares, they will not convert to BPY units any shares of class A stock the holder receives or is entitled to receive due to proration. For further information regarding non-electing shares, refer to the section entitled “The Merger Agreement—Structure and Timing of the Transactions—The Pre-Closing Dividend” beginning on page [—] of this joint proxy statement/prospectus.

For additional information regarding how to vote your shares of GGP common stock, refer to the section entitled “The Special Meeting—How to Vote Your Shares” beginning on page [—] of this joint proxy statement/prospectus.

 

17


Table of Contents
Q: Can I revoke my proxy or change my vote after I have delivered my proxy?

 

A: Yes. You can revoke your proxy or change your vote before your proxy votes your shares of GGP common stock in any of the three following ways:

 

    by sending a written notice to the Corporate Secretary of GGP at 350 N. Orleans St., Suite 300, Chicago, Illinois 60654, which notice must be received by GGP’s Corporate Secretary by 11:59 p.m. (Chicago time) on the business day prior to the date of the special meeting, stating that you would like to revoke your proxy;

 

    by completing, signing and dating another proxy card and returning it by mail in time to be received before the special meeting, or by authorizing a later-dated proxy via the Internet or by telephone, in which case your later-authorized proxy will be recorded and your earlier proxy revoked; or

 

    by attending the special meeting, and voting in person. Simply attending the special meeting without voting will not revoke your proxy or change your vote.

If your shares of GGP common stock are held in an account at a broker or other nominee and you desire to change your vote or vote in person, you should contact your broker or other nominee for instructions on how to do so.

 

Q: Can I revoke or change my election after I have delivered my election form?

 

A: Yes. You can revoke or change your election by written notice received by the payment agent prior to [—], 2018 and in accordance with the instructions included with the election form. If an election form is properly revoked and no subsequent election is properly made before [—], 2018, the shares of GGP common stock represented by such election form shall be deemed to have made an election to receive all of the pre-closing dividend in cash, and will be deemed to have made an election to immediately convert to BPY units any shares of class A stock the holder receives or is entitled to receive due to proration. For illustrative examples of the proration mechanism in the event of a stock election oversubscription or a cash election oversubscription, refer to the section entitled “The Merger Agreement—Structure and Timing of the Transactions—The Pre-Closing Dividend” beginning on page [—] of this joint proxy statement/prospectus.

 

Q: What should I do if I receive more than one (1) set of voting materials for the special meeting?

 

A: Please complete, sign, date and return each proxy card and voting instruction card that you receive or submit your proxy via the Internet or by telephone. You may receive more than one set of voting materials for the special meeting, including multiple copies of this joint proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares of GGP common stock in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares of GGP common stock. If you are a holder of record and your shares of GGP common stock are registered in more than one name, you may receive more than one proxy card.

 

Q: What happens if I sell my shares of GGP common stock before the special meeting?

 

A: The special meeting record date is earlier than both the date of the special meeting and the effective time of the merger. If you transfer your shares of GGP common stock after the record date of the special meeting, you will, unless the transferee requests a proxy from you, retain your right to vote at the special meeting but will transfer the right to receive the pre-closing dividend and the merger consideration to the person to whom you transfer your shares. In order to become entitled to receive the pre-closing dividend and the merger consideration, you must hold your shares of GGP common stock through the record date for the pre-closing dividend and the effective time of the merger, respectively, which GGP expects will occur in the third quarter of 2018.

 

18


Table of Contents
Q: Will GGP continue to pay distributions to its holders of common stock prior to the completion of the Transactions?

 

A: Yes. GGP expects to continue to pay distributions to holders of its common stock, but subject to the limitations set forth in the merger agreement, including:

 

    GGP is permitted to pay the first quarter dividend of $0.22 per share of GGP common stock declared on February 7, 2018, payable on April 30, 2018, to holders of record of GGP common stock on April 13, 2018 (GGP paid the first quarter dividend on April 30, 2018); and

 

    GGP is permitted to declare and pay no more than one (1) quarterly dividend on the shares of GGP common stock in accordance with past practice (including in terms of timing) following payment of the first quarter dividend in 2018 at a rate not to exceed $0.22 per share of GGP common stock, subject to proration if the amended charter is expected to be filed with the Secretary of State of the State of Delaware before the record date for such dividend.

GGP and any of its affiliates are permitted to make distributions necessary for GGP to (i) maintain its status as a REIT under the Internal Revenue Code of 1986, as amended, which we refer to as the Code, or (ii) avoid or reduce the imposition of any entity-level income or excise tax under the Code. Any such distributions made in cash would be deducted from the total cash amount to be distributed to unaffiliated GGP common stockholders in connection with the Transactions.

 

Q: What happens if the Transactions are not completed?

 

A: If the Transactions, including the merger, are not completed, GGP common stockholders will not receive any consideration in connection with the Transactions. Instead, GGP will remain an independent public company and its common stock and preferred stock will continue to be listed and traded on the NYSE. Under certain circumstances, GGP may be required to make a payment to BPY or its affiliates or vice versa. For additional information, refer to the section entitled “The Merger Agreement—Fees and Expenses—Payment of Termination Fee or Reimbursement of Fees and Expenses” beginning on page [—] of this joint proxy statement/prospectus.

 

Q: Who can answer my questions?

 

A: If you have any questions about the Transactions or how to submit your proxy, or need additional copies of this joint proxy statement/prospectus, the enclosed proxy card or election form or voting instructions, you should contact:

350 N. Orleans St., Suite 300

Chicago, Illinois 60654

Attention: Investor Relations

Telephone: (312) 960-5000

www.ggp.com

You can also contact the proxy solicitors hired by GGP as follows:

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, New York 10022

Stockholders may call toll-free:

(888) 750-5834

Banks and Brokers may call collect:

(212) 750-5833

(GGP common stockholders only)

 

19


Table of Contents

GGP has engaged Innisfree M&A Incorporated to assist in the solicitation of proxies for the special meeting. GGP estimates it will pay Innisfree M&A Incorporated a fee of up to approximately $50,000 for the services to be performed. GGP has also agreed to reimburse Innisfree M&A Incorporated for reasonable out-of-pocket expenses and disbursements incurred in connection with the proxy solicitation and to indemnify Innisfree M&A Incorporated against certain losses, costs and expenses. In addition to mailing the proxy solicitation material, GGP directors and executive officers may also solicit proxies in person, by telephone or by any other electronic means of communication deemed appropriate. No additional compensation will be paid to GGP’s directors and executive officers for such services.

 

20


Table of Contents

SUMMARY

The following summary highlights some of the information contained in this joint proxy statement/prospectus. This summary may not contain all of the information that is important to you. For a more complete description of the merger agreement, the other Transaction Agreements and the Transactions we are proposing, you are encouraged to read carefully this entire joint proxy statement/prospectus, including the attached Annexes and the other documents referred to herein. Each item in this summary includes a page reference directing you to a more complete discussion of that topic, although other sections may also be relevant or helpful. You are also encouraged to read the information incorporated by reference into this joint proxy statement/prospectus, which includes important business and financial information about GGP and BPY that has been filed with the SEC. You may obtain the information incorporated by reference into this joint proxy statement/prospectus without charge by following the instructions in the section entitled “Where You Can Find More Information; Incorporation by Reference” beginning on page [—] of this joint proxy statement/prospectus.

Parties to the Merger Agreement (Page [—])

GGP

GGP, a Delaware corporation, is a self-administered and self-managed REIT. GGP’s primary business is owning and operating best-in-class retail properties that provide an outstanding environment and experience for GGP’s communities, retailers, employees, consumers and stockholders. GGP is a S&P 500 real estate company with a property portfolio comprised primarily of Class A retail properties (defined primarily by sales per square foot during 2017). GGP defines best-in-class retail and modern luxury through curated merchandising and elegant culinary experiences set against the backdrop of refined ambiance across a distinguished collection of destinations. GGP’s retail properties are the core centers of retail, dining and entertainment within their trade areas and, therefore, represent hubs of daily life. As of March 31, 2018, GGP owned, either entirely or with joint venture partners, 125 retail properties located throughout the United States comprising approximately 123 million square feet of gross leasable area. In connection with the charter amendments, the surviving corporation’s name will be changed to Brookfield Property REIT Inc. (i.e., BPR). BPR will be a publicly traded U.S. REIT and will issue class A stock that is intended to provide economic equivalence to an investment in BPY, its parent company.

GGP common stock is traded on the NYSE under the trading symbol “GGP.”

BPY

BPY, a Bermuda exempted limited partnership, is one of the world’s largest commercial real estate companies, with approximately $68 billion in total assets. BPY is a leading owner, operator and investor in commercial real estate, with a diversified portfolio of premier office and retail assets, as well as interests in multifamily, triple net lease, industrial, hospitality, self-storage, student housing and manufactured housing assets. BPY, together with the Brookfield voting parties, beneficially owns approximately 34% of GGP common stock as of the date of this joint proxy statement/prospectus. Following the effective time of the charter amendments and the amendment and restatement of the GGPOP partnership agreement, which we refer to as the partnership agreement amendment and restatement, such Brookfield voting parties will exchange their shares of GGP common stock for newly issued shares of class B stock on the terms and conditions in the class B exchange agreement. It is expected that BPY and BPR will share a management team and board of directors, and have an identical distribution policy. Together, BPY and BPR will be the flagship listed real estate companies of BAM, a leading global alternative asset manager with over $285 billion in assets under management.

BPY units are traded on the NASDAQ and TSX under the trading symbols “BPY” and “BPY.UN,” respectively.



 

21


Table of Contents

Goldfinch

Goldfinch, a Delaware corporation, is an indirect, wholly owned subsidiary of BPY that was formed solely for the purpose of engaging in the Transactions. Goldfinch has not carried on any activities or operations to date, except for those activities incidental to its formation and undertaken in connection with the Transactions.

The Transactions (Page [—])

Amendments to and Restatement of each of the GGP Charter and GGP Bylaws

In this joint proxy statement/prospectus, we refer to the current certificate of incorporation of GGP as the GGP charter, and we refer to the current bylaws of GGP as the GGP bylaws. The amended charter will authorize the issuance of class A stock, class B stock and class C stock. Each share of class A stock is intended to provide its holder with an economic return that is equivalent to that of a BPY unit. For a description of the terms of the class A stock, class B stock and class C stock, see “Description of Class A Stock” beginning on page [—] of this joint proxy statement/prospectus, “Description of Class B Stock” beginning on page [—] of this joint proxy statement/prospectus and “Description of Class C Stock” beginning on page [—] of this joint proxy statement/prospectus.

The charter amendments and bylaws amendments will effect a number of changes to the governance of GGP that reflect the recapitalization and anticipated consummation of the Transactions, including, among other things, changes to the voting rights of GGP common stockholders. For a description of the charter amendments and the bylaws amendments, see “The Merger Agreement—Structure and Timing of the Transactions—The Charter Amendments and Bylaws Amendments” beginning on page [—] of this joint proxy statement/prospectus.

Amendment and Restatement of the GGPOP Partnership Agreement

The amended GGPOP partnership agreement will authorize the issuance of GGPOP series K preferred units and series L preferred units, which will be entitled to distributions identical to those paid on class A stock and class B stock, respectively. The amended GGPOP partnership agreement will effect a number of changes to the governance of GGPOP that reflect the recapitalization and anticipated consummation of the Transactions. For a description of the amended GGPOP partnership agreement, see “The Merger Agreement—Structure and Timing of the Transactions—The Partnership Agreement Amendment and Restatement” beginning on page [—] of this joint proxy statement/prospectus.

The Brookfield Affiliate Exchange

Immediately following the effective time of the charter amendments and the partnership agreement amendment and restatement, GGP will, subject to the conditions set forth in the class B exchange agreement and the merger agreement, exchange all shares of GGP common stock held by BPY and the Brookfield voting parties for class B stock in the Brookfield affiliate exchange. Refer to the section entitled “Other Transaction Agreements—The Class B Exchange Agreement” beginning on page [—] of this joint proxy statement/prospectus for a description of the class B exchange agreement. At the effective time of such Brookfield affiliate exchange, each share of GGP common stock held by subsidiaries of GGP will also be exchanged for one (1) share of class B stock.

The Pre-Closing Transactions

Following the consummation of the Brookfield affiliate exchange, GGP intends to consummate certain transactions, including the declaration of the pre-closing dividend and a series of recapitalization and financing transactions and joint venture asset sales. As part of such transactions, BPY has the right, in its sole discretion



 

22


Table of Contents

and without requiring the further consent of GGP or the GGP board, for the purpose of facilitating the consummation of the Transactions, upon reasonable prior written notice to GGP (but at least five (5) business days prior to the filing of the charter amendments with the Secretary of State of the State of Delaware, which we refer to as the charter amendments closing), to require GGP to use reasonable best efforts to take various actions (as described in more detail in the section entitled “The Merger Agreement—Structure and Timing of the Transactions” beginning on page [—] of this joint proxy statement/prospectus). The consummation of all pre-closing transactions and the pre-closing dividend will be conditioned upon the occurrence of the charter amendments closing and receipt by GGP of a written notice from BPY to the effect that all conditions set forth in the merger agreement have been satisfied or waived and that BPY and Goldfinch are prepared to proceed immediately with the closing of the Transactions (and any other evidence requested by GGP that the closing of the Transactions will occur).

The Pre-Closing Dividend

Following the Brookfield affiliate exchange and the pre-closing transactions, GGP will declare a special dividend payable to the unaffiliated GGP common stockholders (not including holders of GGP restricted stock, but including certain holders of GGP options who are deemed stockholders), as of the record date of the pre-closing dividend, consisting of either cash or class A stock, at the election of such GGP common stockholders (with deemed stockholders being deemed to have elected cash) and subject to proration. Refer to the section entitled “The Merger Agreement—Structure and Timing of the Transactions—The Pre-Closing Dividend” beginning on page [—] of this joint proxy statement/prospectus for more information.

The BPY Unit Exchange

Immediately following the effective time of the merger, BPY or an affiliate of BPY will exchange BPY units for an equal number of shares of class A stock issued or issuable as the pre-closing dividend with any unaffiliated GGP common stockholders who had made (or are deemed to have made) an election to receive BPY units in the BPY unit exchange. In the event that (i) an election to receive BPY units has been made with respect to 80% or more of the shares of class A stock to be issued in the pre-closing dividend (or such event is deemed to have occurred pursuant to the terms of the merger agreement) and BPY elects to exchange all shares of class A stock that are issued in the pre-closing dividend for BPY units in the BPY unit exchange or (ii) an election to receive BPY units has been made with respect to 90% or more of the shares of class A stock to be issued in the pre-closing dividend (or such event is deemed to have occurred pursuant to the terms of the merger agreement), then all shares of class A stock that are issued in the pre-closing dividend will automatically be exchanged for BPY units in the BPY unit exchange. Holders of shares of issued and outstanding GGP common stock (excluding GGP restricted stock) who have not made a proper election by the election deadline shall be deemed to have made an election to receive all of the pre-closing dividend in cash, and therefore will be deemed to have made an election to immediately convert to BPY units any shares of class A stock the holder receives or is entitled to receive due to proration. Refer to the section entitled “The Merger Agreement—Structure and Timing of the Transactions—The BPY Unit Exchange” beginning on page [—] of this joint proxy statement/prospectus for more information.

Treatment of GGP Equity Awards

Certain terms used in this discussion are defined at the end of this section.

GGP in-the-money options. Each GGP in-the-money option that is outstanding immediately prior to the effective time of the charter amendments, whether vested or unvested, will be cancelled and terminated at the effective time of the charter amendments and its holder will be deemed to receive a number of shares of GGP common stock (rounded down to the next lower whole number after aggregating all such shares deemed held by



 

23


Table of Contents

such holder) equal to (i) the product of (a) the number of shares of GGP common stock subject to such GGP in-the-money option multiplied by (b) the excess of the equity award aggregate cash equivalent amount over the per-share exercise price applicable to such GGP in-the-money option divided by (ii) the equity award aggregate cash equivalent amount. Each such deemed share of GGP common stock will be deemed to have elected to receive cash for purposes of the pre-closing dividend and will be entitled to receive, promptly following the effective time of the charter amendments, the pre-closing dividend and the per share merger consideration, in each case less applicable withholding taxes.

GGP out-of-the-money options. Immediately prior to the effective time of the merger, each GGP out-of-the-money option, whether vested or unvested, will be converted into an option, in respect of a number of BPY units (rounded down to the next lower whole number after aggregating all such BPY units for the same holder of GGP out-of-the-money options) equal to the product of (i) the number of shares of GGP common stock subject to such GGP out-of-the-money option and (ii) the equity award aggregate stock equivalent amount. The exercise price per BPY unit for each such converted option will be equal to the quotient obtained by dividing (i) the exercise price per share of GGP common stock under such GGP out-of-the-money option by (ii) the equity award aggregate stock equivalent amount, with any fractional cents rounded up to the next higher $0.0001. These adjustments will be made in a manner consistent with the requirements of Section 409A (and, if applicable, Section 424) of the Code. Each such converted option will have generally the same terms and conditions as applied to the underlying GGP out-of-the-money option except that it will fully vest and become exercisable upon a termination of the holder’s employment without “cause” (as defined in the applicable award agreement) or for “good reason” (as defined in the merger agreement), which we refer to as an involuntary termination, during the two-year period following the effective time of the merger.

GGP restricted stock. At the effective time of the merger, each share of GGP restricted stock granted prior to January 1, 2018 will be cancelled and converted (with shares of GGP restricted stock subject to performance conditions converted based on the target level of performance and with the effective time of the merger constituting the “Valuation Date” set forth in the applicable award agreement) into the right to receive (i) for each share of GGP restricted stock subject to performance conditions, the aggregate amount of dividends in respect of such share of GGP restricted stock previously placed into escrow, (ii) a cash amount equal to the equity award average cash amount, less applicable withholding taxes, and (iii) a fraction of a number of shares of restricted class A stock equal to one minus the percentage calculated by dividing (a) the equity award average cash amount by (b) $23.50. Any fractional shares of converted restricted class A stock, which we refer to as converted restricted stock, will be rounded down to the next lower whole number of shares after aggregating all such converted restricted stock held by the same holder.

At the effective time of the merger, each share of GGP restricted stock granted during 2018 will be cancelled and converted, for each holder of GGP restricted stock, into the right to receive a number of shares of converted restricted stock equal to the product of (i) the number of shares of GGP restricted stock held by such holder (with shares of GGP restricted stock subject to performance conditions deemed earned based on the target level of performance and with the effective time of the merger constituting the “Valuation Date” set forth in the applicable award agreement) and (ii) the equity award aggregate stock equivalent amount. Each such share of GGP restricted stock will not receive any of the cash consideration in the pre-closing dividend or the per share merger consideration. Any fractional shares of converted restricted stock will be rounded down to the next lower whole number of shares after aggregating all such shares of converted restricted stock held by the same holder.

Converted restricted stock will have generally the same terms and conditions as applied to the underlying GGP restricted stock, except that (i) shares of converted restricted stock in respect of shares of GGP restricted stock subject to performance conditions will be subject only to time-based vesting and (ii) each share of converted restricted stock will fully vest upon an involuntary termination during the two-year period following the effective time of the merger.



 

24


Table of Contents

GGP FV LTIPs. For each GGP FV LTIP subject to performance conditions, the effective time of the charter amendments will be treated as a “Change of Control” and the “FV LTIP Full Participation Date” (each as defined in the GGPOP partnership agreement and/or the applicable award agreement), and such GGP FV LTIPs will be deemed earned based on the target level of performance and treated as time-vesting GGP FV LTIPs as described below. The Distribution Catch-Up LTIP Units (as defined in the applicable award agreement) tranche for each award of GGP FV LTIPs subject to performance conditions will be “trued up” to reflect prior distributions by GGPOP, and any cash payment necessary to fully pay prior distributions in accordance with the terms of such GGP FV LTIPs will be paid.

Each GGP FV LTIP will participate in the special distribution from GGPOP to holders of GGPOP common units, as required by the GGPOP operating partnership agreement in connection with the pre-closing dividend in the same manner as the GGPOP common units. For any unvested GGP FV LTIP, the equity portion of the special distribution will be subject to the same vesting terms as the GGP FV LTIP, except that it (i) will be subject only to time-based vesting, even if the underlying GGP FV LTIP was subject to performance conditions prior to the distribution, and (ii) will fully vest upon an involuntary termination during the two-year period following the effective time of the merger. In addition, any high water mark applicable to the GGP FV LTIPs will be deemed met, and any awards that are not booked up will be deemed booked-up.

The GGP FV LTIPs remaining after the special distribution and any GGPOP common units into which GGP FV LTIPs were converted prior to the merger will be adjusted to be convertible into a number of GGPOP series K preferred units equal to the quotient of (i) the per share merger consideration the GGP FV LTIPs would have received in the merger if they had converted into GGPOP common units and been exchanged for shares of GGP common stock prior to the merger divided by (ii) the BPY unit closing price.

The LTIP Unit Redemption Right (as defined in the GGPOP partnership agreement) will be adjusted to relate to GGPOP series K preferred units, and the shares exchangeable upon exercise of the LTIP Unit Redemption Right will be shares of class A stock (with the cash amount payable upon redemption relating to the trading price of the class A stock).

GGP AO LTIPs. GGP AO LTIPs will not participate in the special distribution from GGPOP in connection with the Transactions. Instead, each GGP AO LTIP will continue in accordance with its terms, subject to the following adjustments:

 

    the awards will be equitably adjusted to reflect the Transactions and related changes to GGPOP;

 

    the awards will be adjusted to be convertible into GGPOP series K preferred units, with corresponding adjustments so that (i) the LTIP Unit Redemption Right relates to GGPOP series K preferred units and (ii) the shares exchangeable upon exercise of the LTIP Unit Redemption Right will be shares of class A stock (with the cash amount payable upon redemption relating to the trading price of the class A stock);

 

    the GGP AO LTIP Unit distribution and allocation provisions will be modified to correspond to 10% of the distributions and allocations made with respect to the notional number of GGPOP series K preferred units underlying the GGP AO LTIPs; and

 

    GGP AO LTIPs will fully vest upon an involuntary termination during the two-year period following the effective time of the merger.

GGP and BPY continue to consider the appropriate method by which to implement the treatment of the GGP FV LTIPs and GGP AO LTIPs described above and may take certain actions with respect to such awards, including substituting alternative equity interests, as long as those actions substantially preserve the economic, vesting and other terms of the awards.



 

25


Table of Contents

Certain exceptions. Notwithstanding the foregoing description of the treatment of GGP equity awards, outstanding equity awards that are governed by existing “single-trigger” change in control provisions or that are held by recently hired or departed executives generally will be governed by their existing terms. For a description of the treatment of the equity awards held by GGP named executive officers with “single-trigger” change in control provisions, or who recently commenced or terminated employment with GGP, see the section entitled “Special Factors—Interests of GGP’s Directors and Executive Officers in the Transactions” beginning on page [—] of this joint proxy statement/prospectus.

Equity award terminology. The list below sets forth the meanings of certain terms used in the description of the treatment of GGP equity awards.

 

    BPY unit closing price is calculated as the volume weighted average of the trading prices of BPY units on the NASDAQ on the five (5) trading days ending on the day that is three (3) trading days prior to the effective time of the charter amendments (rounded to the nearest $0.001).

 

    equity award aggregate cash equivalent amount is the amount (rounded to the nearest $0.001) equal to the sum of (i) the equity award average stock amount plus (ii) the equity award average cash amount.

 

    equity award aggregate stock equivalent amount is the number (rounded to the nearest 0.001) of BPY units equal to (i) the equity award average stock consideration plus (ii) the quotient of (a) the equity award average cash amount divided by (b) the BPY unit closing price.

 

    equity award average cash amount is the value (rounded to the nearest $0.001) of the aggregate cash consideration that would be paid in respect of each share of GGP common stock (other than shares of GGP restricted stock but including the number of shares of GGP common stock deemed received in respect of GGP in-the-money options) in connection with (i) the pre-closing dividend, assuming that every share makes a cash election and the form of consideration is prorated in accordance with the merger agreement, and (ii) the per share merger consideration.

 

    equity award average stock amount is the value (rounded to the nearest $0.001) equal to (i) the equity award average stock consideration multiplied by (ii) the BPY unit closing price.

 

    equity award average stock consideration is the number (rounded to the nearest 0.001) of BPY units equal to the quotient of (i) $23.50 less the equity award average cash amount divided by (ii) $23.50.

 

    GGP AO LTIP means a GGP equity award in the form of an appreciation-only partnership LTIP unit of GGPOP.

 

    GGP FV LTIP means a GGP equity award in the form of a full value partnership LTIP unit of GGPOP.

 

    GGP option means an option to purchase shares of GGP common stock.

 

    GGP in-the-money option means a GGP option that was granted prior to January 1, 2018 and has an exercise price that is less than the aggregate value of the pre-closing dividend and per share merger consideration.

 

    GGP out-of-the-money option means a GGP option that was granted in 2018 and/or has an exercise price that is equal to or greater than the aggregate value of the pre-closing dividend and per share merger consideration.

Post-Closing Ownership (Page [—])

After giving effect to the Transactions, it is anticipated that unaffiliated GGP common stockholders will own approximately 26% of BPY, calculated based on all shares of class A stock having been exchanged for BPY units (and assuming all of BAM’s interests in the BPY property partnership are exchanged for BPY units) and pro forma for the proposed BAM preferred share conversion.



 

26


Table of Contents

Financing Related to the Transactions (Page [—])

BPY has obtained financing commitments to, among other things, fund a portion of the cash consideration to be paid by BPY and BPY’s affiliates in connection with the consummation of the Transactions. The merger agreement requires BPY to use its reasonable best efforts to take all actions and do all things necessary, proper or advisable to arrange and obtain the proceeds of the financing, and, subject to certain limitations, to use its reasonable best efforts to obtain alternative financing in an amount sufficient to consummate the Transactions if any portion of the committed financing is unavailable on the terms contemplated in the financing commitment. The merger agreement also requires GGP to, subject to certain limitations, use its reasonable best efforts to cooperate with BPY’s reasonable requests in connection with the financing. BPY’s ability to obtain financing (or any alternative financing) or any specific term with respect to such financing is not a condition that must be satisfied or waived prior to the completion of the Transactions. For a description of the financing covenants and the financing commitments, refer to the section entitled “Special Factors—Financing Arrangements” beginning on page [—] of this joint proxy statement/prospectus, and the section entitled “The Merger Agreement—Covenants and Agreements—Financing” beginning on page  [—] of this joint proxy statement/prospectus.

Plans for BPR Following the Transactions (Page [—])

Following completion of the Transactions, it is expected that BPR will remain a REIT. BPY intends to request certain pre-closing transactions by GGP as contemplated by the terms of the merger agreement, including the sales of certain joint venture interests and assets. See “Special Factors—Plans for BPR After the Transactions” beginning on page [—] of this joint proxy statement/prospectus.

Governance of BPR Following the Transactions (Page [—])

The BPR board of directors is expected to be identical to the board of directors of the BPY general partner. BPY and BPR are expected to share a management team, with BPR being managed by BAM under a new master services agreement. Certain employees of GGP may be employed by BAM in connection with the management of BPR. See “Special Factors—Governance of BPR Following the Transactions” beginning on page [—] of this joint proxy statement/prospectus.

Joint Governance Agreement

GGP, BPY, the BPY general partner and Brookfield Properties, Inc., which we refer to as BPI, expect to enter into a joint governance agreement intended to facilitate the governance of BPR and BPY, a form of which is being filed as an exhibit to this joint proxy statement/prospectus, and which we refer to as the joint governance agreement. Among other things, the joint governance agreement grants BPI the right to designate candidates to be nominated for election to each directorship subject to election at any meeting of BPR stockholders. For a description of the joint governance agreement, refer to the section entitled “Special Factors—Governance of BPR Following the Transactions—Joint Governance Agreement” beginning on page [—] of this joint proxy statement/prospectus.

Master Services Agreement

At the time of the closing of the Transactions, BPR and GGPOP will enter into a master services agreement pursuant to which affiliates of BAM will provide management and administration services on terms consistent with the amended and restated master services agreement in place between the services providers and BPY. Pursuant to the master services agreement, BPR and GGPOP, which we refer to as the service recipients, will pay a base management fee to the service providers equal to 1.25% annually of the total capitalization of the service recipients. The base management fee will be calculated and paid quarterly. BAM has agreed to waive the base



 

27


Table of Contents

management fee for a period of 12 months from and after date of the charter amendments closing under the management fee letter agreement. For further information regarding the master services agreement, refer to the section entitled “Special Factors—Governance of BPR Following the Transactions—Master Services Agreement” beginning on page [—] of this joint proxy statement/prospectus. For more information regarding the management fee letter agreement, refer to the section entitled “Other Transaction Agreements—The Management Fee Letter Agreement” beginning on page [—] of this joint proxy statement/prospectus.

An affiliate of BAM will also be entitled to receive incentive distributions based on an amount by which quarterly distributions on the class A stock and GGPOP series K preferred units exceed specified target levels. For more information regarding the incentive distributions, refer to the section entitled “Special Factors—Governance of BPR Following the Transactions—Master Services Agreement” beginning on page [—] of this joint proxy statement/prospectus.

The Special Meeting (Page [—])

The special meeting will be held at GGP’s principal executive offices located at 350 N. Orleans St., Suite 300, Chicago, Illinois 60654-1607, on [—], commencing at [—] (Chicago time). The special meeting is being held in order for GGP common stockholders to consider and vote on:

 

    the merger proposal;

 

    the charter proposals;

 

    the bylaws proposals; and

 

    the compensation proposal.

The GGP board has fixed the close of business on June [—], 2018 as the special meeting record date for determination of GGP common stockholders entitled to receive notice of, and to vote at, the special meeting and any postponements or adjournments of the special meeting. Only holders of record of GGP common stock at the close of business on the special meeting record date are entitled to receive notice of, and to vote at, the special meeting. As of the special meeting record date, there were [—] shares of GGP common stock outstanding and entitled to be voted at the special meeting, held by approximately [—] holders of record. Each share of GGP common stock is entitled to one (1) vote on each of the merger proposal, the charter proposals, the bylaws proposals and the compensation proposal.

The approval of each of the merger proposal, the charter proposals and the bylaws proposals is a condition to the obligations of BPY and GGP to complete the Transactions. The approval of the compensation proposal is not a condition to the obligations of BPY and GGP to complete the Transactions.

Quorum

The holders of record on the special meeting record date (as described in the section entitled “The Special Meeting—Record Date; Who Can Vote at the Special Meeting” beginning on page [—] of this joint proxy statement/prospectus) of a majority of the shares of GGP common stock outstanding on the special meeting record date present in person or represented by proxy will constitute a quorum at the special meeting. All shares of GGP common stock, represented in person or by proxy, including abstentions, will be treated as present for purposes of determining the presence or absence of a quorum for all matters voted on at the special meeting. Broker non-votes will only be counted as present for purposes of a quorum if the beneficial owner provides the broker with voting instructions for at least one proposal. As the proposals set forth in this joint proxy statement/prospectus are considered “non-routine” matters under NYSE Rule 452, a stockholder’s shares will not be considered broker non-votes and will not be counted as present for the purpose of determining the existence of a



 

28


Table of Contents

quorum if no instructions have been provided on how to vote on any of the proposals set forth in this joint proxy statement/prospectus. Under the GGP bylaws, the chairman of the special meeting has the power to adjourn the special meeting whether or not there is a quorum, including if necessary or appropriate to solicit additional proxies if there are not sufficient votes at the time of the special meeting to approve the proposals being considered at the special meeting.

Vote Required

Approval of the merger proposal requires the affirmative vote of the holders of a majority of the outstanding shares of GGP common stock, and the affirmative vote of the holders of a majority of the outstanding target shares. Approval of each of the charter proposals and the bylaws proposals requires the affirmative vote of the holders of at least 66-2/3% of the outstanding shares of GGP common stock. If you abstain or fail to vote your shares in favor of the merger proposal, the charter proposals and the bylaws proposals, including broker non-votes, this will have the same effect as a vote AGAINST such proposal. The Transactions will not be completed unless the merger proposal, the charter proposals and the bylaws proposals are so approved.

Approval of the compensation proposal requires the affirmative vote of the holders of a majority of the shares of GGP common stock present in person or represented by proxy at the special meeting and entitled to vote on such proposal. Abstentions will have the same effect as votes “AGAINST” this proposal. Failures to vote and broker non-votes will have no effect on the approval of this proposal if a quorum is present.

Recommendation of the Special Committee and the GGP Board (Page [—])

The special committee has unanimously: (i) determined that the Transaction Agreements and the Transactions, including the merger, the pre-closing dividend and the charter amendments are advisable and in the best interests of GGP and unaffiliated GGP common stockholders; (ii) recommended that the GGP board approve, adopt and declare advisable and in the best interests of GGP and GGP common stockholders the Transaction Agreements and the Transactions, including the merger, the pre-closing dividend and the charter amendments; (iii) recommended that the GGP board submit for adoption or approval by GGP common stockholders at the special meeting the merger proposal, the charter proposals and the bylaws proposals; and (iv) recommended that the GGP board recommend to GGP common stockholders that they vote in favor of the adoption or approval of the merger proposal, the charter proposals, the bylaws proposals and the compensation proposal.

The GGP board, following the unanimous recommendation of the special committee, has: (i) determined that the Transaction Agreements and the Transactions, including the merger, the pre-closing dividend, the charter amendments and the bylaws amendments are advisable and in the best interests of GGP and GGP common stockholders; and (ii) approved, adopted and declared advisable and in the best interests of GGP and GGP common stockholders the merger agreement, the other Transaction Agreements and the Transactions, including the merger, the pre-closing dividend, the charter amendments and the bylaws amendments.

Accordingly, the GGP board, following the unanimous recommendation of the special committee, recommends that you vote FOR the merger proposal, FOR the charter proposals, FOR the bylaws proposals and FOR the compensation proposal. For a more complete description of the recommendation of the special committee and the GGP board, refer to the section entitled “Special Factors—Reasons for the Transactions and Recommendation of the Special Committee and the GGP Board” beginning on page [—] of this joint proxy statement/prospectus.

Opinion of Goldman Sachs & Co. LLC (Page [—])

At a meeting of the special committee held on March 26, 2018, Goldman Sachs & Co. LLC, which we refer to as Goldman Sachs, rendered to the special committee its oral opinion, subsequently confirmed in writing, to



 

29


Table of Contents

the effect that, as of that date, and based upon and subject to the factors and assumptions set forth in Goldman Sachs’ written opinion, the aggregate amount of the pre-closing dividend in the form of cash and shares of class A stock (or, at the election of GGP common stockholders, BPY units) and merger consideration, which we refer to collectively as the aggregate consideration, to be paid to GGP common stockholders (other than BPY or BPY’s affiliates) pursuant to the merger agreement was fair from a financial point of view to such holders.

The full text of the written opinion of Goldman Sachs, dated March 26, 2018, which sets forth the assumptions made, procedures followed, matters considered, qualifications and limitations on the review undertaken in connection with the opinion, is attached to this joint proxy statement/prospectus as Annex D. Goldman Sachs’ advisory services and opinion were provided for the information and assistance of the special committee in connection with its consideration of the proposed Transactions and the opinion does not constitute a recommendation as to how any GGP common stockholder should vote or make any election with respect to the proposed Transactions or any other matter.

Pursuant to the engagement letter under which Goldman Sachs was engaged to serve as the financial advisor to the special committee, GGP has agreed to pay Goldman Sachs a transaction fee of approximately $30 million, all of which is contingent upon consummation of the Transactions. In addition, GGP has agreed to reimburse Goldman Sachs for certain of its expenses, including reasonable attorneys’ fees and disbursements, and to indemnify Goldman Sachs and related persons against various liabilities, including certain liabilities under the federal securities laws.

For more information, see “Special Factors—Opinion of Goldman Sachs & Co. LLC” beginning on page [—] of this joint proxy statement/prospectus and Annex D of this joint proxy statement/prospectus.

Purpose and Reasons of the Parent Parties and the Brookfield Filing Persons for the Transactions (Page [—])

Under the SEC rules governing “going private” transactions, each of the Parent parties and the Brookfield filing persons may be deemed an affiliate of GGP and, therefore, is required to express its purposes and reasons for the Transactions to GGP’s “unaffiliated security holders,” as defined under Rule 13e-3 of the Exchange Act. For a description of the Parent parties’ and the Brookfield filing persons’ purposes and reasons for the Transactions to unaffiliated GGP common stockholders, refer to the section entitled “Special Factors—Purpose and Reasons of the Parent Parties and the Brookfield Filing Persons for the Transactions” beginning on page [—] of this joint proxy statement/prospectus. For purposes of this joint proxy statement/prospectus, we refer to BAM, Brookfield Retail Holdings VII Sub 3 LLC, which we refer to as BPY Sub 3, Brookfield BPY Retail Holdings II Subco LLC, New Brookfield BPY Retail Holdings II LLC, BPY Retail V LLC, BPY Retail I LLC, Brookfield Retail Mall LLC, Brookfield Retail Holdings II Sub III LLC, Brookfield Retail Holdings Warrants LLC, New GGP Warrants LLC, BW Purchaser, LLC and Brookfield Retail Holdings VII LLC, collectively, as the Brookfield filing persons.

Positions of the Parent Parties and the Brookfield Filing Persons as to the Fairness of the Transactions (Page [—])

Under the SEC rules governing “going private” transactions, each of the Parent parties and the Brookfield filing persons may be deemed an affiliate of GGP and, therefore, is required to express its beliefs as to the fairness of the Transactions, including the merger, to GGP’s “unaffiliated security holders,” as defined under Rule 13e-3 of the Exchange Act. For a description of the Parent parties’ and the Brookfield filing persons’ beliefs as to the fairness of the Transactions, including the merger, to unaffiliated GGP common stockholders, see the section entitled “Special Factors—Positions of the Parent Parties and the Brookfield Filing Persons as to the Fairness of the Transactions” beginning on page [—] of this joint proxy statement/prospectus.



 

30


Table of Contents

Stock Ownership and Voting of Directors and Executive Officers of GGP (Page [—])

As of the close of business on the special meeting record date, there were [—] shares of GGP common stock outstanding and entitled to vote. As of the same date, the directors and executive officers of GGP and their affiliates held and were entitled to vote [—] shares of GGP common stock, collectively representing approximately [—]% of the shares of GGP common stock outstanding and entitled to vote on that date. Approval of the merger proposal requires the affirmative vote of the holders of a majority of the outstanding shares of GGP common stock, and the affirmative vote of the holders of a majority of the outstanding target shares. Approval of each of the charter proposals and the bylaws proposals requires the affirmative vote of the holders of at least 66-2/3% of the outstanding shares of GGP common stock. The directors and executive officers of GGP have each indicated that they expect to vote FOR the merger proposal, FOR the charter proposals, FOR the bylaws proposals and FOR the compensation proposal. Refer to the section entitled “Certain Beneficial Ownership of GGP Common Stock—Ownership of Equity Securities of GGP by Directors and Executive Officers” beginning on page [—] of this joint proxy statement/prospectus.

Interests of GGP’s Directors and Executive Officers in the Transactions (Page [—])

In considering the recommendation of the special committee and the GGP board with respect to the proposed Transactions, you should be aware that directors and executive officers of GGP may have certain interests in the Transactions that may be different from, or in addition to, the interests of GGP common stockholders generally. The special committee and the GGP board were aware of and considered these interests, among other matters, in evaluating and, in the case of the special committee, negotiating the merger agreement and the Transactions and in recommending that the merger proposal and related proposals be adopted by the GGP common stockholders. These interests include, but are not limited to, the following:

 

    the treatment of the equity awards, including the consideration to be received by holders of those awards in connection with the Transactions (in the form of cash and/or equity), as described in more detail in the section entitled “Special Factors—Interests of GGP’s Directors and Executive Officers in the Transactions—Treatment of GGP Equity Awards” beginning on page [—] of this joint proxy statement/prospectus;

 

    one of GGP’s executive officers is party to an employment agreement that provides for accelerated vesting of equity awards upon a change in control of GGP and severance benefits in the event of certain qualifying terminations of employment;

 

    each of the other GGP executive officers is entitled to severance benefits upon a termination of employment without cause pursuant to either an offer letter with GGP or GGP’s severance policy, and accelerated vesting of equity awards upon certain qualifying terminations of employment following a change in control of GGP pursuant to either the merger agreement or, for certain executive officers, the terms currently applicable to certain equity awards; and

 

    continued indemnification benefits and coverage under a directors and officers insurance policy.

Additionally, one of GGP’s executive officers entered into a new employment arrangement with BAM with respect to the terms of his employment with BAM following the closing of the Transactions. For a more complete description of these interests, see the section entitled “Special Factors—Interests of GGP’s Directors and Executive Officers in the Transactions” beginning on page [—] of this joint proxy statement/prospectus.

Listing of Class A Stock, New Series A Preferred Stock and BPY Units (Page [—])

Approval of the listing on the NASDAQ or the NYSE of class A stock to be issued in the Transactions pursuant to the merger agreement is a condition to each of GGP’s and BPY’s obligation to consummate the Transactions, subject to official notice of issuance prior to the closing of the Transactions. It is expected that class A stock will be listed and trade on the NASDAQ under the trading symbol “BPR.”



 

31


Table of Contents

GGP has applied to list the new series A preferred stock on the NASDAQ. It is expected that new series A preferred stock will trade on the NASDAQ under the trading symbol “BPRAP.”

BPY has applied to list the BPY units to be issued to unaffiliated GGP common stockholders in connection with the Transactions on the TSX. Such listing is subject to the approval of the TSX in accordance with its applicable listing requirements. BPY also intends to apply to list the BPY units to be issued to unaffiliated GGP common stockholders in connection with the Transactions on the NASDAQ. BPY units are currently traded on the NASDAQ and TSX under the trading symbols “BPY” and “BPY.UN,” respectively.

Following the consummation of the Transactions, it is expected that the GGP common stock and GGP’s pre-existing series A preferred stock will be deregistered under the Exchange Act and delisted from the NYSE. However, BPR will be subject to the reporting requirements under the Exchange Act.

Appraisal Rights (Page [—])

If the Transactions are completed, GGP common stockholders who comply exactly with the applicable requirements and procedures of Section 262 of the DGCL will be entitled to demand appraisal of their shares of GGP common stock (i.e., the dissenting shares) and receive in lieu of the per share merger consideration a cash payment equal to the “fair value” of their GGP common stock, as determined by the Delaware Court of Chancery, which we refer to as the Court of Chancery, in accordance with Section 262 of the DGCL, plus interest, if any, on the amount determined to be the fair value, subject to the provisions of Section 262 of the DGCL. Such appraised value may be greater than, the same as or less than the per share merger consideration. Section 262 of the DGCL is included as Annex J to this joint proxy statement/prospectus. We encourage you to read these provisions carefully and in their entirety. Moreover, due to the complexity of the procedures for exercising and perfecting the right to seek appraisal, GGP common stockholders who are considering exercising such rights are encouraged to seek the advice of legal counsel. Failure to comply exactly with all of the procedures set forth in Section 262 of the DGCL will result in a termination or loss of the right of appraisal. A GGP common stockholder who submits a proxy card and who wishes to exercise appraisal rights must mark “AGAINST” or “ABSTAIN” with respect to the merger proposal. GGP common stockholders who wish to exercise their appraisal rights and hold shares in the name of a bank, broker, trust or other nominee must instruct their bank, broker, trust or other nominee to enable them to demand appraisal for their common stock.

Conditions to Consummation of the Charter Amendments, the Bylaws Amendments, the Partnership Agreement Amendment and Restatement and the Merger (Page [—])

The obligation of each of GGP, BPY and Goldfinch to consummate the charter amendments, the bylaws amendments, the partnership agreement amendment and restatement and the merger is subject to the fulfillment or written waiver by each of BPY (on behalf of itself and Goldfinch) and GGP, prior to the effective time of the charter amendments and the partnership agreement amendment and restatement, of the following conditions:

 

    receipt of the requisite stockholder approval;

 

    to the extent required by the TSX, the consent of the holders of a majority of the BPY units for the issuance of BPY units in the BPY unit exchange, which we refer to as the BPY unitholder consent;

 

    absence of governmental authority enacting, issuing, enforcing or entering any law (whether temporary, preliminary or permanent) that is in effect and restrains, enjoins or otherwise prohibits consummation of any Transaction;

 

    effectiveness of the registration statement of which this joint proxy statement/prospectus forms a part and the absence of any stop order or proceedings for that purpose having been initiated by the SEC that has not been withdrawn;


 

32


Table of Contents
    the BPY units to be issued in the BPY unit exchange have been approved for listing on the TSX and the NASDAQ subject to official notice of issuance; and

 

    the class A stock to be issued in the Transactions has been authorized for listing on the NASDAQ or the NYSE (BPY and GGP anticipate that the class A stock will be listed on the NASDAQ), subject to official notice of issuance (provided, that this condition need not be satisfied if all shares of class A stock that are issued in the pre-closing dividend are exchanged for BPY units in the BPY unit exchange).

On April 23, 2018, BPY received a determination from the TSX that the BPY unitholder consent may be obtained by an action by written consent and accordingly, no special meeting of BPY unitholders will be required. On May 31, 2018, BAM, which beneficially owns an approximate 62% limited partnership interest in BPY (on a fully exchanged basis), provided the TSX with the BPY unitholder consent by an action of written consent.

In addition, BPY’s and Goldfinch’s obligation to effect the charter amendments, the bylaws amendments, the partnership agreement amendment and restatement and the merger is also subject to the fulfillment or written waiver by BPY, at or prior to the effective time of the charter amendments and the partnership agreement amendment and restatement, of the following conditions:

 

    the representations and warranties of GGP being true and correct to the extent required and subject to the applicable materiality standards set forth in the merger agreement; GGP having complied with and performed in all material respects all covenants and agreements required to be performed by it under the merger agreement at or prior to the charter amendments closing; the absence of any material adverse effect with respect to GGP that remains in effect; and BPY will have received a certificate from GGP’s Chief Executive Officer certifying the satisfaction of the foregoing; and

 

    the receipt of an opinion with respect to certain matters concerning GGP’s qualification and taxation as a REIT under the Code.

In addition, GGP’s obligation to effect the charter amendments, the bylaws amendments, the partnership agreement amendment and restatement and the merger is also subject to the fulfillment or written waiver by GGP, at or prior to the effective time of the charter amendments and the partnership agreement amendment and restatement, of the following conditions:

 

    the representations and warranties of BPY and Goldfinch being true and correct to the extent required and subject to the applicable materiality standards set forth in the merger agreement; BPY and Goldfinch having complied with and performed in all material respects all covenants and agreements required to be performed by them under the merger agreement at or prior to the charter amendments closing; the absence of any material adverse effect with respect to BPY that remains in effect; and GGP will have received a certificate from an authorized officer of BPY certifying the satisfaction of the foregoing;

 

    availability of one or more registration statements registering (i) BPY units issuable from time to time in the BPY unit exchange and (ii) the resale of BPY units transferred by BAM in accordance with the rights agreement, each having been declared effective by the SEC under the Securities Act and the absence of any stop order or proceedings for that purpose having been initiated by the SEC that has not been withdrawn;

 

    the receipt of opinions with respect to (i) certain matters concerning BPY’s qualification and taxation as a partnership for U.S. federal income tax purposes; and (ii) solvency of BPR subject to certain qualifications as of the effective time of the merger after giving effect to the Transactions; and

 

    the rights agreement will have been executed and will be in full force and effect.


 

33


Table of Contents

On May 24, 2018, BPY filed shelf registration statements on Form F-3 with the SEC to register BPY units deliverable to holders of class A stock in satisfaction of the exercise of the exchange rights contained in the amended charter and the rights agreement. As noted above, such registration statements are required to become effective at or prior to the completion of the Transactions.

For additional information regarding the conditions to the consummation of the charter amendments, the bylaws amendments, the partnership agreement amendment and restatement and the merger and a complete list of such conditions, refer to the section entitled “The Merger Agreement—Conditions to Consummation of the Charter Amendments, the Bylaws Amendments, the Partnership Agreement Amendment and Restatement and the Merger” beginning on page [—] of this joint proxy statement/prospectus.

Regulatory Approvals (Page [—])

GGP and BPY have determined that the filing of notification and report forms under the Hart-Scott-Rodino Act (or other antitrust laws) will not be necessary to complete the Transactions. However, at any time before or after the merger, the Antitrust Division of the U.S. Department of Justice, the U.S. Federal Trade Commission, a state attorney general or a foreign competition authority could take action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the merger or seeking divestiture of substantial assets of GGP, BPY or their respective affiliates. Private parties may also bring legal actions under the antitrust laws under certain circumstances.

No Solicitation or Negotiation of Acquisition Proposals (Page [—])

No Solicitation (Page [—])

GGP has agreed that it and its subsidiaries will not, and will direct its and their respective directors, officers or other employees, controlled affiliates or any investment banker, attorney, accountant or other agent or representative retained by any of them, which, collectively and acting in such capacity, we refer to as representatives, not to:

 

    solicit, knowingly initiate, knowingly facilitate or knowingly encourage any acquisition proposal (as defined in the section entitled “The Merger Agreement—Covenants and Agreements—No Solicitation or Negotiation of Acquisition Proposals” beginning on page [—] of this joint proxy statement/prospectus);

 

    participate in any negotiations regarding, or furnish to any person any nonpublic information with respect to, any acquisition proposal;

 

    subject to certain exceptions, engage in discussions with any person with respect to any acquisition proposal;

 

    approve or recommend any acquisition proposal;

 

    enter into any letter of intent or similar document or any agreement or commitment providing for any acquisition proposal;

 

    take any action in connection with an acquisition proposal to make the provisions of any anti-takeover statute or any restrictive provision of any applicable anti-takeover provision in the GGP charter or GGP bylaws inapplicable to any person other than BPY and BPY’s affiliates or to any transactions constituting or contemplated by an acquisition proposal; or

 

    resolve or agree to do any of the foregoing.

GGP has also agreed that neither it nor its subsidiaries will terminate, amend, modify or waive any rights under, or release any person (other than BPY) from, any “standstill” or other similar agreement unless the special



 

34


Table of Contents

committee determines in good faith (after consultation with its outside legal counsel) that the failure to take such action would be reasonably likely to be inconsistent with the special committee’s fiduciary duties under Delaware law.

Negotiation of Acquisition Proposals (Page [—])

If, prior to the receipt of the requisite stockholder approval, GGP receives an unsolicited acquisition proposal from a third party that did not result from its material breach of the non-solicitation provisions, and the special committee determines in good faith, after consultation with its outside counsel and financial advisor, that such acquisition proposal constitutes or is reasonably likely to constitute or lead to a superior proposal (as defined in the section entitled “The Merger Agreement—Covenants and Agreements—No Solicitation or Negotiation of Acquisition Proposals” beginning on page [—] of this joint proxy statement/prospectus), and that the failure to take the following actions would be reasonably likely to be inconsistent with the special committee’s or the GGP board’s fiduciary duties under Delaware law, then, GGP may:

 

    furnish information to the third party making such acquisition proposal, provided, that (i) substantially concurrently GGP provides BPY any such information not previously made available to BPY; and (ii) prior to furnishing such information, GGP receives from the third party an executed confidentiality agreement that satisfies certain requirements; and

 

    engage in discussions and negotiations with the third party and its representatives with respect to such acquisition proposal (and, if applicable, waive or otherwise modify any “standstill” or similar agreement).

No Change in Recommendation or Alternative Acquisition (Page [—])

Under the merger agreement, the GGP board and the special committee generally may not change their recommendation of the approval of the charter amendments, the bylaws amendments or the adoption of the merger agreement by the GGP common stockholders, which we refer to as the GGP board recommendation, or do any of the following (each of which we refer to as a GGP board recommendation change):

 

    withhold, withdraw, amend or modify in a manner adverse to BPY or Goldfinch, or publicly propose to withhold, withdraw, amend or modify in a manner adverse to BPY or Goldfinch, the GGP board recommendation; or

 

    approve, adopt or recommend an acquisition proposal.

However, prior to obtaining the requisite stockholder approval, the special committee (or the GGP board acting on the special committee’s recommendation) may make a GGP board recommendation change only in response to (i) GGP receiving an unsolicited, bona fide written acquisition proposal not involving a material breach of the non-solicitation provisions that the special committee (or the GGP board acting on the recommendation of the special committee) determines in good faith, after consultation with the special committee’s financial advisor and outside legal counsel, constitutes a superior proposal; or (ii) an intervening event as described in the section entitled “The Merger Agreement—Covenants and Agreements—No Solicitation or Negotiation of Acquisition Proposals” beginning on page [—] of this joint proxy statement/prospectus.

Prior to any such action being taken, GGP must provide written notice to BPY advising of its intentions and the reasons therefor and take the other actions described in the section entitled “The Merger Agreement—Covenants and Agreements—No Solicitation or Negotiation of Acquisition Proposals” beginning on page [—] of this joint proxy statement/prospectus, including engaging in negotiations in good faith with BPY to the extent BPY requests to determine whether any changes to the terms and conditions of the merger agreement that have been committed to by BPY in writing would make: (i) in the case of a superior proposal, it no longer being a



 

35


Table of Contents

superior proposal; or (ii) in the case of an intervening event, the failure to make a GGP board recommendation change would no longer be reasonably likely to be inconsistent with the GGP board’s or the special committee’s fiduciary duties.

Termination of the Merger Agreement (Page [—])

The merger agreement may be terminated:

 

    by either BPY or GGP if:

 

    prior to the effective time of the charter amendments, by mutual written agreement of BPY and GGP;

 

    prior to the effective time of the charter amendments and the partnership agreement amendment and restatement, the charter amendments, the bylaws amendments, the partnership agreement amendment and restatement and the merger fail to be consummated on or before September 26, 2018 (provided that the right to terminate the merger agreement pursuant to this provision will not be available to any party whose breach of the merger agreement has been the principal cause of or resulted in such failure);
    prior to the effective time of the charter amendments and the partnership agreement amendment and restatement, the requisite stockholder approval is not obtained at the special meeting; or

 

    prior to the effective time of the charter amendments, any order of a governmental authority permanently prohibiting consummation of any Transaction becomes final and non-appealable;

 

    by GGP if:

 

    subject to cure rights and on the condition that GGP is not then in material breach of any Transaction Agreement, BPY or Goldfinch breaches or violates any of its material covenants, agreements or other obligations under any Transaction Agreement, or any of the representations and warranties of BPY and Goldfinch in any Transaction Agreement becomes inaccurate, which breach, violation or inaccuracy would result in a failure of any related closing condition and cannot be cured by September 26, 2018;

 

    prior to the effective time of the charter amendments and the partnership agreement amendment and restatement and receipt of the requisite stockholder approval, GGP enters into a definitive written agreement providing for the superior proposal in compliance with the terms of the merger agreement and pays the termination fee described in the section entitled “The Merger Agreement—Fees and Expenses—Payment of Termination Fee or Reimbursement of Fees and Expenses” beginning on page [—] of this joint proxy statement/prospectus, and otherwise complies with the non-solicitation provisions in all material respects;

 

    GGP has confirmed by written notice to BPY that (i) GGP is prepared to consummate the charter amendments closing and the merger, and GGP intends to terminate the merger agreement pursuant to this provision if BPY or Goldfinch fails to consummate the charter amendments closing and the other Transactions when required pursuant to the terms of the merger agreement; and (ii) BPY or Goldfinch fails to consummate the charter amendments closing or any other Transactions (other than a pre-closing transaction as identified in the section entitled “The Merger Agreement—Covenants and Agreements—Pre-Closing Transactions” beginning on page [—] of this joint proxy statement/prospectus) within two (2) business days of the date of the charter amendments closing or the date on which such other Transactions were required to occur pursuant to the terms of the merger agreement;

 

    the BPY unitholder consent is not obtained at a BPY unitholder meeting held for the purpose of obtaining consent of BPY unitholders for the issuance of BPY units in the BPY unit exchange; or


 

36


Table of Contents
    by BPY if:

 

    subject to cure rights and on the condition that each of BPY or Goldfinch is not then in material breach of any Transaction Agreement, prior to the effective time of the charter amendments and the partnership agreement amendment and restatement, GGP breaches or violates any of its material covenants, agreements or other obligations under any Transaction Agreement, or any of the representations and warranties of GGP in the merger agreement becomes inaccurate, which breach, violation or inaccuracy would result in a failure of any related closing condition and cannot be cured by September 26, 2018;

 

    prior to receipt of the requisite stockholder approval, any of the following events has occurred (each of which we refer to as a triggering event):

 

    a GGP board recommendation change;

 

    GGP failing to include a GGP board recommendation in this joint proxy statement/prospectus;

 

    GGP recommending to the GGP common stockholders an acquisition proposal other than the Transactions; or

 

    an acquisition proposal made after March 26, 2018 having been publicly announced and GGP failing to issue a press release that reaffirms the special committee’s recommendation of the Transaction Agreements and the Transactions within five (5) business days after receipt of such written request by BPY or, if earlier, prior to the special meeting (provided, that such written request was received no less than two (2) business days prior to the special meeting).

On April 23, 2018, BPY received a determination from the TSX that the BPY unitholder consent may be obtained by an action by written consent and, accordingly, no special meeting of BPY unitholders will be required. On May 31, 2018, BAM, which beneficially owns an approximate 62% limited partnership interest in BPY (on a fully exchanged basis), provided the TSX with the BPY unitholder consent by an action of written consent.

Termination Fees and Expenses (Page [—])

If the merger agreement is terminated by BPY due to the requisite stockholder approval not being obtained at the special meeting, GGP will pay to BPY all reasonable out-of-pocket third-party expenses and fees incurred by BPY and Goldfinch in connection with the Transaction Agreements and the Transactions in an amount not to exceed $20 million.

GGP must pay a fee of up to $400 million to BPY or an affiliate of BPY designated by BPY if:

 

    the merger agreement is terminated by GGP in order to enter into a definitive agreement providing for a superior proposal prior to receipt of the requisite stockholder approval, in which event the fee of up to $400 million must be paid concurrently with, and as a condition to, termination;

 

    the merger agreement is terminated by BPY prior to receipt of the requisite stockholder approval because a triggering event has occurred in which event, the fee of up to $400 million must be paid within two (2) business days after demand by BPY; or

 

    each of the following specific circumstances in clauses (i) through (iii) below occur:

 

   

(i) the merger agreement is terminated either (a) by GGP or BPY due to a failure of the charter amendments, the bylaws amendments, the partnership agreement amendment and restatement and the merger to be consummated on or before September 26, 2018 or due to a failure to obtain the



 

37


Table of Contents
 

requisite stockholder approval, or (b) by BPY due to a breach or violation by GGP of certain of its obligations in the merger agreement relating to non-solicitation of acquisition proposals or holding the special meeting; and

 

    (ii) following the execution and delivery of the merger agreement and prior to the special meeting, a competing acquisition transaction (as defined in the section entitled “The Merger Agreement—Fees and Expenses—Payment of Termination Fee or Reimbursement of Fees and Expenses” beginning on page [—] of this joint proxy statement/prospectus) is publicly announced or has become publicly disclosed and not withdrawn; and

 

    (iii) within 12 months following such termination, a competing acquisition transaction has been consummated or GGP enters into a definitive agreement with respect to any competing acquisition transaction during such 12-month period and such competing acquisition transaction is thereafter consummated, in which event, the fee of up to $400 million must be paid within two (2) business days after demand by BPY.

In the event the merger agreement is terminated by GGP or BPY only due to a failure of the charter amendments, the bylaws amendments, the partnership agreement amendment and restatement and the merger to be consummated on or before September 26, 2018 or due to a failure to obtain the requisite stockholder approval, GGP would not have to pay a fee of up to $400 million to BPY or an affiliate of BPY designated by BPY, but, as noted above, if the merger agreement is terminated by BPY only due to the requisite stockholder approval not being obtained at the special meeting, GGP will pay to BPY all reasonable out-of-pocket third-party expenses and fees incurred by BPY and Goldfinch in connection with or related to the Transaction Agreements and the Transactions in an amount not to exceed $20 million.

BPY must pay a fee of up to $1.2 billion to GGP within two (2) business days after demand by GGP if:

 

    the merger agreement is terminated by GGP because:

 

    GGP has confirmed by written notice to BPY that (i) GGP is prepared to consummate the charter amendments closing and the merger, and GGP intends to terminate the merger agreement pursuant to this provision if BPY or Goldfinch fails to consummate the charter amendments closing and the other Transactions when required pursuant to the terms of the merger agreement; and (ii) BPY or Goldfinch fails to consummate the charter amendments closing or any other Transactions (other than a pre-closing transaction) within two (2) business days of the date of the charter amendments closing or on which such other Transactions were required to occur pursuant to the terms of the merger agreement; or

 

    the merger agreement is terminated by GGP because the BPY unitholder consent is not obtained at a BPY unitholder meeting, in which event GGP elects to receive the fee of up to $1.2 billion and chooses not to reject (and return, if applicable) such fee of up to $1.2 billion to preserve all rights to pursue any claim, action or proceeding for monetary damages against BPY in accordance with the merger agreement.

Specific Performance (Page [—])

The parties are entitled to an injunction or injunctions, specific performance and other equitable relief to prevent breaches of the merger agreement and to specifically enforce its terms and provisions, in addition to any other remedy to which they are entitled under the merger agreement, at law or in equity, provided that each party acknowledges and agrees that:

 

    GGP will be entitled to seek specific performance to cause BPY and Goldfinch to consummate the charter amendments, the partnership agreement amendment and restatement, the merger and the other Transactions, if:


 

38


Table of Contents
    either BPY or Goldfinch fails to consummate any Transaction (other than a pre-closing transaction) within five (5) business days of the date of the consummation of the charter amendments or on which such other Transaction was required to occur in accordance with the terms of the merger agreement;

 

    the financing provided for by the financing commitment (as described in the section entitled “The Merger Agreement—Covenants and Agreements—Financing” beginning on page [—] of this joint proxy statement/prospectus) or the alternative financing, as applicable, has been funded or is reasonably expected to be funded at the closing of the Transactions; and

 

    GGP has confirmed in writing that, if specific performance is granted and the committed financing is funded, then GGP will take all such actions in its power to cause the consummation of the charter amendments and the merger to occur.

Material U.S. Federal Income Tax Considerations and Consequences (Page [—])

The pre-closing dividend is expected to be treated as a dividend for U.S. federal income tax purposes to the extent it is paid out of GGP’s earnings and profits, which is expected to include a substantial amount of capital gain that is expected to be recognized as a result of the pre-closing transactions entered into after the Brookfield affiliate exchange. To the extent the pre-closing dividend exceeds GGP’s earnings and profits, it is expected to be treated as a non-taxable return of capital which will reduce the unaffiliated GGP common stockholder’s tax basis in its GGP common stock to the extent thereof, and to the extent it exceeds the unaffiliated GGP common stockholder’s adjusted tax basis, it is expected to result in gain being recognized by the unaffiliated GGP common stockholder. The conversion of shares of GGP common stock held by unaffiliated GGP common stockholders into the right to receive the merger consideration in the merger, and the exchange of class A stock for BPY units at the election of an unaffiliated GGP common stockholder, are each expected to result in gain or loss being recognized by the unaffiliated GGP common stockholder. However, certain aspects of the tax consequences of the Transactions are not entirely clear, and each holder of GGP common stock is strongly urged to consult its tax advisor regarding the potential U.S. federal income tax consequences to it of the Transactions.

For a more complete discussion of the U.S. federal income tax consequences of the Transactions, refer to the section entitled “Material U.S. Federal Income Tax Considerations and Consequences—Material U.S. Federal Income Tax Considerations and Consequences of the Transactions” beginning on page [—] of this joint proxy statement/prospectus.

Accounting Treatment of the Transactions (Page [—])

The Transactions are expected to result in BPY consolidating BPR effective on the closing date of the merger. The Transactions are expected to be treated as a business combination that is accounted for under the acquisition method of accounting in accordance with IFRS 3, Business Combinations. Accordingly, BPY will recognize the fair value of GGP’s assets acquired and liabilities assumed at closing.

Absent an election by BPR to apply push-down accounting, a new basis of accounting will not be reflected within BPR’s financial statements following the Transactions. The shares of class A stock will be recorded separately from permanent equity of BPR within temporary equity as they are redeemable under conditions not under the sole control of BPR.

For more information, see “Special Factors—Accounting Treatment of the Transactions” beginning on page [—] of this joint proxy statement/prospectus.



 

39


Table of Contents

Comparison of Rights of Holders of GGP Common Stock, Class A Stock and BPY Units (Page [—])

The rights of GGP common stockholders are governed by the DGCL and by the GGP charter and the GGP bylaws. The rights of BPY unitholders are governed by BPY’s limited partnership agreement and certain provisions of Bermuda law. Upon the consummation of the Transactions, the rights of the former unaffiliated GGP common stockholders who elect to receive shares of class A stock will be governed by, and will be subject to, the DGCL, the amended charter and the amended bylaws, and the rights of former unaffiliated GGP common stockholders who elect (or are deemed to have elected) to receive BPY units will be governed by, and will be subject to, the BPY limited partnership agreement and certain provisions of Bermuda law.

Following the consummation of the Transactions, holders of class A stock will have the right to exchange each share of class A stock for one (1) BPY unit or the cash equivalent of one (1) BPY unit, at BPY’s election. Subject to the prior rights of holders of all classes and series of preferred stock at the time outstanding having prior rights as to dividends, each share of class A stock will entitle its holder to cumulative dividends per share in a cash amount equal in value to the amount of any distribution made on a BPY unit. Such exchange and distribution rights are subject to adjustment in the event of certain dilutive or other capital events by BPY or BPR. The record and payment dates for the dividends or other distributions upon the shares of class A stock, to the extent not prohibited by applicable law, will be the same as the record and payment dates for the dividends or other distributions upon the BPY units. All such dividends to holders of class A stock will be paid prior and in preference to any dividends or distributions on the class B stock, class C stock or the common stock and will be fully declared and paid before any dividends are declared and paid or any other distributions are made on any class B stock, class C stock or the common stock. The holders of class A stock shall not be entitled to any dividends from BPR other than the class A dividend.

Except as otherwise expressly provided in the amended charter or as required by law, the holders of class A stock, class B stock and class C stock will vote together and not as separate classes. The holders of shares of each of class B stock and class C stock will be entitled to five (5) votes for each share thereof held at the record date for the determination of stockholders entitled to vote on any matter. The holders of shares of class A stock will be entitled to one (1) vote for each share thereof held at the record date for the determination of stockholders entitled to vote on any matter, except that holders of shares of class A stock will not be entitled to vote (i) on a liquidation or dissolution or conversion of the class A stock in connection with a market capitalization liquidation event (as described in “Comparison of Rights of Holders of GGP Common Stock, Class A Stock and BPY Units” beginning on page [—] of this joint proxy statement/prospectus), or (ii) to reduce the voting power of the class B stock or class C stock.

Upon a liquidation, dissolution or winding up of BPR or GGPOP, holders of class A stock will rank senior to the class B stock and class C stock, and will be entitled to certain cash payments as described below under the section entitled “Description of Class B Stock—Liquidation” beginning on page [—] of this joint proxy statement/prospectus.

For a summary of certain material differences between the rights of GGP common stockholders, holders of class A stock and BPY unitholders under the governing documents of GGP, BPR and BPY and the applicable laws noted above, see “Comparison of Rights of Holders of GGP Common Stock, Class A Stock and BPY Units” beginning on page  [—] of this joint proxy statement/prospectus.

Comparison of Rights of Holders of GGP’s Pre-Existing Series A Preferred Stock and New Series A Preferred Stock (Page [—])

If the merger is consummated, the holders of GGP’s pre-existing series A preferred stock will become holders of the new series A preferred stock. The rights of GGP’s pre-existing series A preferred stockholders are currently governed by and subject to the provisions of the DGCL, the GGP charter, including the pre-existing



 

40


Table of Contents

Certificate of Designations, Preferences and Rights of 6.375% Series A Cumulative Redeemable Preferred Stock of GGP (a copy of which is being filed as an exhibit to this joint proxy statement/prospectus, and which is incorporated by reference herein), and the GGP bylaws. Upon consummation of the Transactions, the rights of GGP’s pre-existing series A preferred stockholders who receive the new series A preferred stock will be governed by the DGCL and the amended charter, the amended bylaws and the new Certificate of Designations, Preferences and Rights of 6.375% Series A Cumulative Redeemable Preferred Stock of BPR, which we refer to as the new series A preferred stock designations.

For a summary of certain material differences between the rights of holders of GGP’s pre-existing series A preferred stock and the holders of the new series A preferred stock under the governing documents of GGP, BPR and BPY and the applicable laws noted above, see “Comparison of Rights of Holders of GGP Series A Preferred Stock and New Series A Preferred Stock” beginning on page [—] of this joint proxy statement/prospectus.

Litigation Relating to the Transactions (Page [—])

Following the announcement of the execution of the merger agreement, lawsuits challenging the Transactions were filed on behalf of putative classes of GGP common stockholders.

On April 10, 2018, a purported GGP common stockholder filed an action captioned Susman v. GGP Inc., et al., and on April 11, 2018, a purported GGP common stockholder filed an action captioned Lowinger v. GGP Inc., et al. Both actions were filed in the Court of Chancery and name as defendants GGP, BPY and the members of the GGP board. On April 19, 2018, the actions were consolidated under the caption In re GGP, Inc. Stockholder Litigation, and the complaint filed in the Susman action was designated the operative complaint in the consolidated action. On May 10, 2018, the plaintiffs filed an amended complaint. The amended complaint alleges generally that the members of the GGP board and BPY breached their fiduciary duties by agreeing to the Transactions following an unfair process and at an unfair price and by soliciting approval of the Transactions by way of the preliminary registration statement on Form S-4 and Form F-4 filed by GGP and BPY, respectively, with the SEC, which the amended complaint alleges to be materially misleading and incomplete. The amended complaint also alleges that GGP and BPY aided and abetted the alleged breaches of fiduciary duties by members of the GGP board. The amended complaint seeks, among other things, injunctive relief, attorney’s and expert fees and expenses, and, if the Transactions are completed, money damages. The plaintiffs have moved to expedite their suit and are seeking a preliminary injunction to block the Transactions. On May 24, 2018, defendants filed motions to dismiss the amended complaint, and the grounds for such motions will be set forth in briefs to be filed in accordance with the schedule agreed to by the parties and/or ordered by the Court of Chancery. On June 1, 2018, defendants filed oppositions to the motion to expedite. On June 8, 2018, plaintiffs filed a reply brief on their motion to expedite. A hearing on the motion to expedite is scheduled before the Court of Chancery for June 12, 2018.

On May 3, 2018, a purported GGP common stockholder filed an action in the United States District Court for the District of Delaware captioned Blonstein v. GGP Inc., et al. The Blonstein action names as defendants GGP, BPY and the members of the GGP board. The complaint alleges generally that the members of the GGP board breached their fiduciary duties by agreeing to the Transactions following an unfair process and at a price that undervalues GGP. The complaint also alleges that BPY aided and abetted breaches of fiduciary duties by members of the GGP board. Finally, the complaint alleges that the defendants violated Sections 14(a) and 20(a) of the Exchange Act by filing a preliminary registration statement on Form S-4 and Form F-4, respectively, with the SEC that was each materially misleading and that omitted material facts. The complaint seeks, among other things, injunctive relief, attorney’s and expert fees and expenses, and, if the Transactions are completed, money damages. On June 7, 2018, plaintiff moved to expedite the suit. The defendants have not yet answered or otherwise responded to the complaint.



 

41


Table of Contents

Other potential plaintiffs may file lawsuits challenging the Transactions. The outcomes of the pending actions and any additional future litigation are uncertain. Such litigation, if not resolved, could prevent or delay completion of the Transactions and result in substantial costs to GGP and BPY, including any costs associated with the indemnification of directors and officers. One of the conditions to the closing of the Transactions is the absence of any court or other governmental authority enacting, issuing, enforcing or entering any law (whether temporary, preliminary or permanent) that is in effect and restrains, enjoins or otherwise prohibits consummation of any Transaction. Therefore, if a plaintiff were successful in obtaining an injunction prohibiting the consummation of the Transactions on the agreed-upon terms, then such injunction may prevent the Transactions from being completed, or from being completed within the expected timeframe. The defense or settlement of any lawsuit or claim that remains unresolved at the time the Transactions are completed may adversely affect BPY’s business, financial condition, results of operations and cash flows.

Risk Factors (Page [—])

In evaluating the Transactions, you should carefully read this joint proxy statement/prospectus in its entirety, including all of the annexes hereto and the other information included and incorporated by reference herein, including the matters addressed in the section entitled “Cautionary Statement Concerning Forward-Looking Statements” beginning on page [—] of this joint proxy statement/prospectus. You should especially consider the factors described under the section entitled “Risk Factors” beginning on page [—] of this joint proxy statement/prospectus and under the caption “Risk Factors” or “Risks and Uncertainties,” as applicable, in GGP’s Annual Report on Form 10-K for the year ended December 31, 2017 and BPY’s Annual Report on Form 20-F for the year ended December 31, 2017, and subsequent Quarterly Reports on Form 10-Q with respect to GGP, each of which is incorporated herein by reference.



 

42


Table of Contents

SELECTED HISTORICAL FINANCIAL INFORMATION OF GGP

The following tables set forth selected consolidated financial information for GGP as of and for each of the five years ended December 31, 2013 through December 31, 2017 and were derived from the audited consolidated financial statements for GGP, which were prepared in conformity with GAAP. The financial information of GGP as of March 31, 2018 and for the three months ended March 31, 2018 and 2017 is derived from unaudited consolidated financial statements and, in the opinion of GGP management, contains all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of this data at or for those dates. The results of operations for the three months ended March 31, 2018 are not necessarily indicative of the results that may be expected for the entire year ending December 31, 2018. You should not assume that the results of operations for any past periods are indicative of results for any future period. The following information should be read together with the consolidated financial statements for GGP, the notes related thereto and the related reports of management on the financial condition and performance of GGP, all of which are contained in the reports of GGP filed with the SEC and incorporated herein by reference. For more information, see the section entitled “Where You Can Find More Information; Incorporation by Reference” beginning on page [—] of this joint proxy statement/prospectus.

 

    Three Months Ended
March 31,
    Years Ended December 31,  
        2018             2017         2017     2016     2015     2014     2013  
    (Dollars in millions, except per share amounts)  

OPERATING DATA (1)

             

Total revenues

  $ 574     $ 566     $ 2,328     $ 2,346     $ 2,404     $ 2,536     $ 2,486  

Total expenses

    427       373       1,490       1,546       1,480       1,594       1,646  

Income from continuing operations

    66       110       667       1,308       1,394       398       329  

Net income available to common stockholders

    60       103       641       1,272       1,359       650       288  

Basic earnings per share:

             

Continuing operations

  $ 0.06     $ 0.12     $ 0.72     $ 1.44     $ 1.54     $ 0.42     $ 0.32  

Discontinued operations

    —         —         —         —         —         0.32       (0.01
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total basic earnings per share

  $ 0.06     $ 0.12     $ 0.72     $ 1.44     $ 1.54     $ 0.74     $ 0.31  
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings per share:

             

Continuing operations

  $ 0.06     $ 0.11     $ 0.68     $ 1.34     $ 1.43     $ 0.39     $ 0.32  

Discontinued operations

    —         —         —         —         —         0.30       (0.01
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total diluted earnings per share

  $ 0.06     $ 0.11     $ 0.68     $ 1.34     $ 1.43     $ 0.69     $ 0.31  
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Dividends declared per share

  $ 0.22     $ 0.22     $ 0.88     $ 1.06     $ 0.71     $ 0.63     $ 0.51  
     

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

CASH FLOW DATA (2) (3)

             

Operating activities

  $ 265     $ 232     $ 1,295     $ 1,136     $ 1,069     $ 951     $ 873  

Investing activities

  $ (133   $ (103   $ (855   $ 521     $ (313   $ (681   $ 158  

Financing activities

  $ (119   $ (364   $ (738   $ (1,564   $ (778   $ (488   $ (1,140

 

    As of
March 31,
    As of December 31,  
    2018     2017     2016     2015     2014     2013  

BALANCE SHEET DATA

           

Investment in real estate assets—cost

  $ 24,851     $ 24,822     $ 23,278     $ 23,791     $ 25,582     $ 25,406  

Total assets

  $ 23,258       23,350       22,733       24,074       25,282       25,708  

Total debt

  $ 13,135       13,039       12,637       14,422       16,150       15,825  

Redeemable preferred noncontrolling interests

  $ 52       52       144       158       164       132  

Redeemable common noncontrolling interests

  $ 171       196       119       130       135       97  

Stockholders’ equity

  $ 8,659       8,796       8,636       8,270       7,606       8,103  


 

43


Table of Contents

 

(1) For all periods presented, the operating data related to continuing operations do not include the effects of amounts reported in discontinued operations. For the periods following December 31, 2014, the definition of discontinued operations changed based on updated accounting guidance.
(2) Cash flow data only represents GGP’s consolidated cash flows as defined by GAAP and as such, operating cash flow does not include the cash received from joint venture entities (in which GGP owns a noncontrolling interest) through which GGP owns interests in certain properties, which we refer to as GGP’s unconsolidated real estate affiliates, except to the extent of contributions to or distributions from GGP’s unconsolidated real estate affiliates.
(3) GGP has adopted accounting guidance which requires that the statement of cash flows explain the change during the reporting period in the total of cash, cash equivalents and restricted cash or restricted cash equivalents. This resulted in the reclassification of restricted cash within the statement of cash flows for all periods presented.


 

44


Table of Contents

SELECTED HISTORICAL FINANCIAL INFORMATION OF BPY

The following tables set forth selected consolidated financial information for BPY as of and for each of the five years ended December 31, 2013 through December 31, 2017 and were derived from the audited consolidated financial statements for BPY, which were prepared in conformity with IFRS as issued by IASB. The financial information of BPY as of March 31, 2018 and for the three months ended March 31, 2018 and 2017 is derived from unaudited consolidated financial statements and, in the opinion of BPY management, contains all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of this data at or for those dates. The results of operations for the three months ended March 31, 2018 are not necessarily indicative of the results that may be expected for the entire year ending December 31, 2018. You should not assume that the results of operations for any past periods are indicative of results for any future period. The following information should be read together with the consolidated financial statements for BPY, the notes related thereto and the related reports of management on the financial condition and performance of BPY, all of which are contained in the reports of BPY filed with the SEC and incorporated herein by reference. For more information, see the section entitled “Where You Can Find More Information; Incorporation by Reference” beginning on page [—] of this joint proxy statement/prospectus.

 

     Three Months
Ended March 31,
    Years Ended December 31,  
     2018      2017     2017      2016      2015      2014      2013 (2)  
            (Dollars in millions, except per unit amounts)  

Total revenue

   $ 1,620        1,528     $ 6,135      $ 5,352      $ 4,853      $ 4,473      $ 4,287  

Net income

     1,023        187       2,468        2,717        3,766        4,420        1,763  

Net income (loss) attributable to BPY units

     192        (60     136        660        1,064        1,154        118  

Net income attributable to BPY general partnership units

     —          —         —          —          1        1        —    

Net income attributable to BAM

     —          —         —          —          —          —          232  

Net income (loss) per BPY unit (1)

     0.69        (0.21     0.48        2.30        3.72        5.59        1.41  

Distributions per BPY unit

     0.315        0.295       1.18        1.12        1.06        1.00        0.63  

 

(1) Net income per BPY unit has been presented effective for the period from the date of the spin-off of BPY from BAM on April 15, 2013, as this is the date of legal entitlement of earnings to the BPY units. As at March 31, 2018, refers to holders of BPY units, BPY general partnership units, redemption-exchange units of Brookfield Property L.P., special limited partnership units of Brookfield Property L.P. and exchange LP units of Brookfield Office Properties Exchange LP. For more information regarding these securities, see the section entitled “Description of BPY Units” beginning on page [—] of this joint proxy statement/prospectus.
(2) For periods prior to April 15, 2013, the date of the spin-off of BPY from BAM, the financial information reflected is that of BAM’s commercial property operations.

 

     As of
March 31,
     As of December 31,  
     2018      2017      2016      2015      2014      2013 (2)  
            (Dollars in millions)  

Investment properties

   $ 52,828      $ 51,357      $ 48,784      $ 41,599      $ 41,141      $ 34,153  

Equity accounted investments

     19,613        19,761        16,844        17,638        10,356        9,281  

Total assets

     86,626        84,347        78,127        71,866        65,575        52,446  

Debt obligations

     38,678        36,884        33,519        30,526        27,006        21,640  

Capital securities

     4,241        4,165        4,171        4,031        4,011        2,369  

Total equity

     36,266        35,124        34,161        30,933        28,299        24,990  

Equity attributable to BPY unitholders (1)

     22,549        22,186        22,358        21,958        20,208        13,624  

 

(1)

For the periods following December 31, 2013, refers to holders of BPY units, BPY general partnership units, redemption-exchange units of Brookfield Property L.P., special limited partnership units of



 

45


Table of Contents
  Brookfield Property L.P. and exchange LP units of Brookfield Office Properties Exchange LP. As of December 31, 2013, refers to holders of BPY units, BPY general partnership units, redemption-exchange units of Brookfield Property L.P. and special limited partnership units of Brookfield Property L.P. For more information regarding these securities, see the section entitled “Description of BPY Units” beginning on page [—] of this joint proxy statement/prospectus.
(2) For periods prior to April 15, 2013, the date of the spin-off of BPY from BAM, the financial information reflected is that of BAM’s commercial property operations.


 

46


Table of Contents

SELECTED UNAUDITED PRO FORMA CONDENSED

CONSOLIDATED FINANCIAL DATA OF BPY FOLLOWING THE TRANSACTIONS

Set forth below is certain selected unaudited pro forma condensed consolidated financial information for BPY giving pro forma effect to (i) the acquisition of all of the outstanding shares of GGP common stock, including the pre-closing dividend and financing transactions and (ii) the other pro forma adjustments noted in such pro forma financial statements in the section entitled “Unaudited Pro Forma Condensed Consolidated Financial Statements for BPY” beginning on page [—] of this joint proxy statement/prospectus. These pro forma adjustments are made as if such Transactions occurred as of March 31, 2018, in the case of the unaudited pro forma consolidated balance sheet, or as of January 1, 2017, in the case of the unaudited pro forma consolidated statements of income. The unaudited pro forma consolidated financial statements have been prepared based upon currently available information and assumptions deemed appropriate by BPY management and should be read in conjunction with the historical financial information of BPY and GGP included or incorporated by reference into this document. The preparation of the unaudited pro forma consolidated financial statements requires BPY management to make estimates and assumptions deemed appropriate. The unaudited pro forma consolidated financial statements are not intended to represent, or be indicative of, the actual financial position and results of operations that would have occurred if the Transactions described therein had been effected on the dates indicated, nor are they indicative of BPY’s future results.

 

BPY

Summary Selected Unaudited Pro Forma Condensed Consolidated Financial Information (1)

 
(US$ Millions)    As of
March 31, 2018
 

BALANCE SHEET DATA

  

Investment properties

   $ 71,015  

Equity accounted investments

     22,519  

Total assets

     108,686  

Debt obligations

     53,361  

Equity

  

Limited partners

     8,077  

General partner

     6  

Non-controlling interests attributable to:

  

Redeemable/exchangeable and special limited partnership units

     14,809  

Limited partnership units of Brookfield Office Properties Exchange LP

     293  

Class A stock of Brookfield Property REIT

     5,963  

Interests of others in operating subsidiaries and properties

     14,031  
  

 

 

 

Total equity

   $ 43,179  
  

 

 

 


 

47


Table of Contents
(US$ Millions)    For the Three
Months Ended
March 31, 2018
     For the Year Ended
December 31, 2017
 

INCOME STATEMENT DATA

     

Total revenue

   $ 2,006      $ 7,724  

Net income

     894        1,201  

Net income attributable to:

     

Limited partners

     114        (212

General partner

     —          —    

Non-controlling interests attributable to:

     —          —    

Redeemable/exchangeable and special limited partnership units

     189        (331

Limited partnership units of Brookfield Office Properties Exchange LP

     5        (8

Class A stock of Brookfield Property REIT Inc.

     53        (224

Interests of others in operating subsidiaries and properties

     533        1,976  

Basic earnings per BPY unit

     0.35        (0.74

Diluted earnings per BPY unit

     0.34        (0.74
  

 

 

    

 

 

 

 

(1) The pro forma information above assumes that all unaffiliated GGP common stockholders elect to receive shares of class A stock rather than BPY units. The actual number of shares of class A stock issued will depend on the elections made by each unaffiliated GGP common stockholder. Assuming that all class A stock issued in the pre-closing dividend are exchanged for BPY units in the BPY unit exchange, the impact would have been an additional $5,963 million in equity attributable to limited partners of BPY and a corresponding decrease in non-controlling interests and reallocation of net income from non-controlling interests to limited partners of BPY.


 

48


Table of Contents

SELECTED UNAUDITED PRO FORMA CONDENSED

CONSOLIDATED FINANCIAL DATA OF BPR FOLLOWING THE TRANSACTIONS

Set forth below is certain selected unaudited pro forma condensed consolidated financial information for BPR giving pro forma effect to (i) the acquisition of all of the outstanding shares of GGP common stock, including the pre-closing dividend and financing transactions and (ii) the other pro forma adjustments noted in such pro forma financial statements in the section entitled “Unaudited Pro Forma Condensed Consolidated Financial Statements for BPR” beginning on page [—] of this joint proxy statement/prospectus. These pro forma adjustments are made as if such Transactions occurred as of March 31, 2018, in the case of the unaudited pro forma consolidated balance sheet, or as of January 1, 2017, in the case of the unaudited pro forma consolidated statements of operations. The unaudited pro forma consolidated financial statements have been prepared based upon currently available information and assumptions deemed appropriate by BPY management and should be read in conjunction with the historical financial information of BPY and GGP included or incorporated by reference into this document. The preparation of the unaudited pro forma consolidated financial statements requires BPY management to make estimates and assumptions deemed appropriate. The unaudited pro forma consolidated financial statements are not intended to represent, or be indicative of, the actual financial position and results of operations that would have occurred if the Transactions described therein had been effected on the dates indicated, nor are they indicative of BPR’s future results.

 

(US$ Millions)

   As of
March 31, 2018
 

BALANCE SHEET DATA

  

Net property and equipment

   $ 11,920  

Investment in Unconsolidated Real Estate Affiliates

     5,267  

Total assets

     18,485  

Mortgages, notes and loans payable

     14,450  

Redeemable noncontrolling interests

     52  

Temporary equity

     6,205  

Total stockholders’ equity

     (3,297

Total equity

     (3,220

 

(US$ Millions)

   For the Three
Months Ended
March 31, 2018
    For the Year
Ended
December 31, 2017
 

INCOME STATEMENT DATA

    

Total revenues

   $ 377     $ 1,510  

Net income (loss)

     (50     214  

Allocation to noncontrolling interests

     (1     (6

Preferred Stock dividends

     (4     (16

Net income (loss) attributable to temporary equity (class A stock)

     (55     192  

Net income attributable to holders of class B stock and class C stock

     —         —    


 

49


Table of Contents

UNAUDITED COMPARATIVE PER UNIT AND PER SHARE DATA

The following table sets forth, for the three months ended March 31, 2018 and the year ended December 31, 2017, selected per share information for shares of GGP common stock on a historical and pro forma combined basis, which were prepared in conformity with GAAP, and, for the three months ended March 31, 2018 and the year ended December 31, 2017, selected per unit information for BPY units on a historical and pro forma equivalent basis, which were prepared in conformity with IFRS, as issued by the IASB. The pro forma combined and pro forma equivalent information, as applicable, are presented as if the Transactions had become effective on January 1, 2017. Except for the historical information for the year ended December 31, 2017, the information in the table is unaudited. The pro forma information is presented for illustrative purposes only and is not necessarily indicative of the operating results that would have occurred if the Transactions had been completed as of January 1, 2017, nor is it necessarily indicative of the future operating results or financial position of BPR and BPY as a combined company. You should read the data with the historical consolidated financial statements and related notes of GGP and BPY contained in their Annual Reports on Form 10-K and Form 20-F, respectively, for the year ended December 31, 2017, condensed consolidated interim financial statements and related notes of GGP contained in its Quarterly Reports on Form 10-Q as of and for the three months ended March 31, 2018 and condensed and consolidated financial statements and related notes of BPY as of and for the three months ended March 31, 2018 contained in a Form 6-K filed by BPY with the SEC on May 11, 2018. The foregoing documents are incorporated by reference into this joint proxy statement/prospectus. For more information, see the section entitled “Where You Can Find More Information; Incorporation by Reference” beginning on page [—] of this joint proxy statement/prospectus.



 

50


Table of Contents

The GGP pro forma equivalent per share amounts and BPY pro forma combined per unit amounts were calculated using the methodology as described above in the section entitled “Selected Unaudited Pro Forma Condensed Consolidated Financial Data of BPY Following the Transactions” beginning on page [—] of this joint proxy statement/prospectus.

 

     GGP / BPR      BPY  
     Historical      Pro Forma
Equivalent (1)
     Historical      Pro
Forma
Combined (2)
 

Basic earnings per common share or unit:

           

For the three months ended March 31, 2018

   $ 0.06      $ N/A      $ 0.69      $ 0.35  

For the year ended December 31, 2017

   $ 0.72      $ N/A      $ 0.48      $ (0.74

Diluted earnings per common share or unit:

           

For the three months ended March 31, 2018

   $ 0.06      $ N/A      $ 0.68      $ 0.34  

For the year ended December 31, 2017

   $ 0.68      $ N/A      $ 0.48      $ (0.74

Cash dividends declared per common share or distributions per unit:

           

For the three months ended March 31, 2018

   $ 0.22      $ 0.315      $ 0.315      $ 0.315  

For the year ended December 31, 2017

   $ 0.88      $ 1.18      $ 1.18      $ 1.18  

Book value per common share or unit:

           

As of March 31, 2018

   $ 8.78      $ N/A      $ 32.04      $ N/A  

As of December 31, 2017

   $ 8.94        N/A      $ 31.53        N/A  

Earnings to combined fixed charges and preferred share dividends ratio:

           

For the three months ended March 31, 2018

     1.65x        N/A        1.36x        N/A  

For the year ended December 31, 2017

     2.74x        N/A        1.31x        N/A  

For the year ended December 31, 2016

     3.25x        N/A        1.40x        N/A  

 

(1) The publicly traded class A stock will rank senior to the class B stock and class C stock held by BPY. The class B stock and class C stock are not expected to be publicly traded. Consequently, no earnings per share information will be presented for the class B stock and class C stock.
(2) Assumes that all eligible unaffiliated GGP common stockholders elect to receive class A stock. If all eligible unaffiliated GGP common stockholders elect (or are deemed to have elected) to receive BPY units, an additional approximately 253.8 million BPY units would have been issued, also resulting in basic and diluted earnings per BPY unit of $0.35 and $0.34, respectively, for the three months ended March 31, 2018, and $(0.74) and $(0.74), respectively, for the year ended December 31, 2017.


 

51


Table of Contents

COMPARATIVE GGP AND BPY MARKET PRICE AND DIVIDEND/DISTRIBUTION INFORMATION

GGP common stock is traded on the NYSE under the trading symbol “GGP.” The following tables set forth for the periods indicated the high and low reported sales prices per share, as well as the dividend declared, of GGP common stock as reported by the NYSE. On March 23, 2018, the last trading day before the date of the announcement of the signing of the merger agreement, the closing price of GGP common stock on the NYSE was $21.15 per share. On June 8, 2018, the last practicable trading day for which information is available as of the date of this joint proxy statement/prospectus, the closing price of GGP common stock on the NYSE was $20.67 per share. The following table sets forth the high and low prices per unit of GGP common stock on the NYSE for the periods indicated. For current market price information, stockholders are urged to consult publicly available sources.

On February 7, 2018, the GGP board declared a first quarter GGP common stock dividend of $0.22 per share payable on April 30, 2018 to stockholders of record on April 13, 2018 (GGP paid the first quarter dividend on April 30, 2018). On May 3, 2018, the GGP board declared a second quarter GGP common stock dividend of $0.22 per share payable on July 31, 2018 to stockholders of record on July 13, 2018. The following table sets forth the distribution amounts declared for GGP common stockholders for the periods indicated.

GGP’s Market Price Data and Dividend Data

 

     GGP Common Stock  
     High Price      Low Price      Dividend Per Share  

For the calendar quarters ended:

        

2018

        

June 30, 2018 (through June 8, 2018)

   $ 20.77      $ 19.09      $ 0.22  

March 31, 2018

   $ 23.86      $ 20.02      $ 0.22  

2017

        

December 31, 2017

   $ 24.23      $ 18.83      $ 0.22  

September 30, 2017

   $ 24.12      $ 20.31      $ 0.22  

June 30, 2017

   $ 24.37      $ 21.05      $ 0.22  

March 31, 2017

   $ 26.21      $ 22.34      $ 0.22  

2016

        

December 31, 2016

   $ 27.43      $ 23.89      $ 0.48 (1) 

September 30, 2016

   $ 32.10      $ 27.29      $ 0.20  

June 30, 2016

   $ 29.92      $ 26.02      $ 0.19  

March 31, 2016

   $ 30.30      $ 24.43      $ 0.19  

 

(1) On December 13, 2016, the GGP board declared a special cash dividend of $0.26 per share payable on January 27, 2017 to stockholders of record on December 27, 2016, which special cash dividend was paid on January 27, 2017.

BPY’s Market Price Data and Distribution Data

BPY units currently trade on the NASDAQ, under the ticker symbol “BPY,” and the TSX, under the ticker symbol “BPY.UN.” Prior to the start of trading on the NASDAQ on November 16, 2017, the BPY units traded on the NYSE. On November 6, 2017, the last trading day before market speculation about the merger occurred, the closing price of BPY units on the NASDAQ was $23.33 per unit. On March 23, 2018, the last trading day before the date of the announcement of the signing of the merger agreement, the closing price of BPY units on



 

52


Table of Contents

the NASDAQ was $19.14 per unit. On June 8, 2018, the last practicable trading day for which information is available as of the date of this joint proxy statement/prospectus, the closing price of BPY units on the NASDAQ was $19.93 per unit. The following table sets forth the high and low prices per unit of BPY units on the NASDAQ and the NYSE, as applicable, for the periods indicated. For current market price information, stockholders are urged to consult publicly available sources.

 

     BPY Units  
     High      Low  

For the calendar quarters ended:

     

2018

     

June 30, 2018 (through June 8, 2018)

   $ 20.16      $ 18.46  

March 31, 2018

   $ 22.31      $ 18.13  

2017

     

December 31, 2017

   $ 24.96      $ 21.16  

September 30, 2017

   $ 24.21      $ 22.88  

June 30, 2017

   $ 24.10      $ 21.13  

March 31, 2017

   $ 23.54      $ 21.22  

2016

     

December 31, 2016

   $ 23.09      $ 20.31  

September 30, 2016

   $ 24.94      $ 22.07  

June 30, 2016

   $ 24.98      $ 21.41  

March 31, 2016

   $ 23.42      $ 18.69  

On November 6, 2017, the last trading day before market speculation about the merger occurred, the closing price of BPY units on the TSX was C$29.73 per unit. On March 23, 2018, the last trading day before the date of the announcement of the signing of the merger agreement, the closing price of BPY units on the TSX was C$24.63 per unit. On June 8, 2018, the last practicable trading day for which information is available as of the date of this joint proxy statement/prospectus, the closing price of BPY units on the TSX was C$25.87 per unit. The following table sets forth the high and low prices per unit of BPY units on the TSX for the periods indicated. For current market price information, stockholders are urged to consult publicly available sources.

 

     BPY Units  
     High      Low  

For the calendar quarters ended:

     

2018

     

June 30, 2018 (through June 8, 2018)

   C$ 26.15      C$ 23.30  

March 31, 2018

   C$ 27.95      C$ 23.28  

2017

     

December 31, 2017

   C$ 31.10      C$ 27.08  

September 30, 2017

   C$ 31.30      C$ 28.01  

June 30, 2017

   C$ 31.50      C$ 28.79  

March 31, 2017

   C$ 30.99      C$ 28.30  

2016

     

December 31, 2016

   C$ 30.80      C$ 27.39  

September 30, 2016

   C$ 32.80      C$ 29.01  

June 30, 2016

   C$ 31.94      C$ 28.14  

March 31, 2016

   C$ 31.92      C$ 26.00  

BPY has declared and paid a distribution quarterly since the second quarter of 2013. On May 2, 2018, the board of directors of the BPY general partner declared a distribution of $0.315 per unit of BPY units for the



 

53


Table of Contents

second quarter of 2018, which is payable on June 29, 2018. Any determination as to the declaration of distributions is at the sole discretion of the BPY general partner based on factors it deems relevant. The following table sets forth the distribution amounts declared for BPY unitholders for the periods indicated.

 

BPY Distribution (Declaration Date)    Amount  

May 2, 2018

   $ 0.315  

February 7, 2018

   $ 0.315  

November 1, 2017

   $ 0.295  

August 1, 2017

   $ 0.295  

May 4, 2017

   $ 0.295  

February 2, 2017

   $ 0.295  

Recent Closing Prices

The following table shows the closing sale prices of GGP common stock and BPY units as reported on the NYSE and the NASDAQ on March 23, 2018, the last full trading day before the date of the public announcement of the merger agreement, and on June 8, 2018, the most recent practicable date before the date of this joint proxy statement/prospectus.

 

     GGP Common Stock      BPY Units  

March 23, 2018

   $ 21.15      $ 19.14  

June 8, 2018

   $ 20.67      $ 19.93  


 

54


Table of Contents

RATIO OF CONSOLIDATED EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DISTRIBUTIONS

The following table sets forth (i) GGP’s consolidated ratio of earnings to fixed charges and (ii) GGP’s consolidated ratio of earnings to fixed charges and preferred stock dividends, in both cases on a historical basis for the periods indicated: (1)

 

     Three Months
Ended March 31,
     Years Ended December 31,  
     2018      2017      2016      2015      2014      2013  

Ratio of consolidated earnings to total fixed charges

     1.70        2.83        3.35        3.11        2.13        1.72  

Ratio of consolidated earnings to combined fixed charges and preferred stock distributions

     1.65        2.74        3.25        3.02        2.08        1.69  

 

(1) For purposes of calculating the ratio of earnings to fixed charges, (a) earnings consist of pre-tax income (loss) from continuing operations, plus fixed charges, and (b) fixed charges is defined as interest expense (including amortization of deferred financing costs) and the estimated portion of operating expense deemed by management to represent the interest component of rent expense.


 

55


Table of Contents

SPECIAL FACTORS

General

Under the terms of the merger agreement, BPY will acquire GGP through a series of transactions including (i) the charter amendments; (ii) the bylaws amendments; (iii) the partnership agreement amendment and restatement; (iv) the Brookfield affiliate exchange; (v) the pre-closing transactions as BPY may request, including recapitalization or financing transactions; (vi) the pre-closing dividend; and (vii) the merger.

The charter amendments will, among other things, authorize the issuance of class A stock, class B stock and class C stock. Following the charter amendments and the partnership agreement amendment and restatement, all shares of GGP common stock held by BPY and BPY’s affiliates will be exchanged for class B stock in the Brookfield affiliate exchange, and at the effective time of such Brookfield affiliate exchange, each share of GGP common stock held by subsidiaries of GGP will also be exchanged for one (1) share of class B stock. Following the Brookfield affiliate exchange and the pre-closing transactions as BPY may request, GGP will declare the pre-closing dividend consisting of cash or class A stock at the election of eligible unaffiliated GGP common stockholders and subject to proration. For illustrative examples of the proration mechanism in the event of a stock election oversubscription or a cash election oversubscription, refer to the section entitled “The Merger Agreement—Structure and Timing of the Transactions—The Pre-Closing Dividend” beginning on page [—] of this joint proxy statement/prospectus. Unaffiliated GGP common stockholders who elect to receive the pre-closing dividend in the form of class A stock will also have the option to exchange all, but not less than all, shares of class A stock that such holder received or is entitled to receive as the pre-closing dividend for BPY units in the BPY unit exchange.

At the effective time of the merger, Goldfinch will merge with and into GGP, with GGP surviving the merger. We refer to GGP following the consummation of the Transactions as BPR (or the surviving corporation). Each share of GGP common stock issued and outstanding immediately prior to the effective time of the merger (except for certain excluded shares of GGP common stock, which include cancelled shares, dissenting shares and shares of GGP restricted stock) will be cancelled and extinguished and automatically converted into the right to receive an amount in cash from BPY equal to the per share merger consideration. Each share of GGP’s pre-existing series A preferred stock outstanding immediately prior to the effective time of the merger shall be converted into one (1) share of new series A preferred stock. Immediately following the effective time of the merger, BPY or an affiliate of BPY will exchange BPY units for an equal number of shares of class A stock distributed as the pre-closing dividend with any unaffiliated GGP common stockholders who had made an election (or were deemed to have made an election) to receive BPY units in the BPY unit exchange.

Each share of Goldfinch common stock that is outstanding immediately prior to the effective time of the merger will be converted into a number of shares of class C stock equivalent to the pre-closing dividend share number divided by the number of outstanding shares of Goldfinch common stock (rounded to the nearest whole share). Because all shares of Goldfinch common stock are indirectly held by BPY through an affiliate of BPY, all shares of class C stock will be indirectly held by BPY immediately following the Transactions. After giving effect to the Transactions, it is anticipated that unaffiliated GGP common stockholders will own approximately 26% of BPY, calculated based on all shares of class A stock having been exchanged for BPY units (and assuming all of BAM’s interests in the BPY property partnership are exchanged for BPY units) and pro forma for the proposed BAM preferred share conversion.

Background of the Transactions

The GGP board and GGP management, with the assistance of GGP’s advisors (from time to time), regularly evaluate GGP’s business and operations, and in furtherance thereof regularly monitor competitors’ activities and transactions and periodically review and assess potential strategic opportunities and alternatives to enhance stockholder value, taking into account, among other things, that from time to time BPY considers various

 

56


Table of Contents

alternatives with respect to its investment in GGP, including increasing, maintaining or decreasing its and the Brookfield voting parties’ approximately 34% equity ownership position in GGP or acquiring all of the shares of GGP common stock held by the unaffiliated GGP common stockholders. As part of this process, the GGP board and GGP management have regularly considered alternatives that could complement, enhance or expand GGP’s business or that might otherwise offer growth opportunities for GGP, including, among other things, remaining a standalone entity, potential acquisitions of other companies, businesses and assets in the retail property industry and related industries, dispositions of one or more of GGP’s businesses and/or assets, joint ventures and other strategic alliances and collaborations, share repurchases and other transactions. As a result, GGP has held discussions from time to time with certain third parties, and on occasion BPY and affiliates thereof, regarding such potential strategic opportunities and alternatives.

At a regular meeting of the GGP board on December 13, 2016, GGP management reported to the GGP board its forecasts with respect to the 2017 financial performance of GGP, which reflected 4.1% projected growth in GGP’s net operating income, 3.5% projected growth in GGP’s EBITDA, 4.6% projected growth in GGP’s funds from operations and 3.9% projected growth in GGP’s funds from operations per share, in each case as compared to GGP management’s forecasts for GGP’s 2016 year-end results.

During January and February 2017, Sandeep Mathrani, the chief executive officer of GGP, and other members of GGP management, periodically fielded inbound inquiries and participated in preliminary in-person and telephonic discussions with senior executives of several financial sponsors, investment companies and financial institutions and companies that operate in the retail property industry and related industries regarding potential strategic opportunities and alternatives that could complement, enhance or expand GGP’s business or that might otherwise offer growth opportunities for GGP. Mr. Mathrani updated the GGP board periodically during this period regarding these preliminary discussions.

On February 23, 2017, at a regular meeting of the GGP board, GGP management discussed with the GGP board recent developments and negative changes to market conditions in the retail property industry and presented to the GGP board revised 2017 projections, which took into account such developments and changes. In particular, the projections had been adjusted downward to reflect 3.0% projected growth in GGP’s net operating income, 2.4% projected growth in GGP’s EBITDA, 4.1% projected growth in GGP’s funds from operations and 3.4% projected growth in GGP’s funds from operations per share. At this meeting, GGP management also presented the GGP board with a five-year forecast prepared by GGP management that reflected projected funds from operations of $1,588 million in 2018, $1,655 million in 2019, $1,778 million in 2020, $1,875 million in 2021 and $1,976 million in 2022. After discussions about the revised 2017 projections, the GGP board instructed Mr. Mathrani and the other members of GGP management to conduct a further review of GGP’s projected financial performance and determine the merits of actively investigating potential strategic opportunities and alternatives that could complement, enhance or expand GGP’s business or that might otherwise offer growth opportunities for GGP. Accordingly, following this board meeting, GGP management and its advisors performed preparatory work regarding potential strategic opportunities and alternatives.

During March and April 2017, GGP management received several inquiries from and participated in preliminary in-person and telephonic discussions with senior executives of several financial sponsors, investment companies and financial institutions and companies that operate in the retail property industry and related industries regarding potential strategic opportunities and alternatives that could complement, enhance or expand GGP’s business or that might otherwise offer growth opportunities for GGP, and followed up on certain discussions that had taken place during January and February 2017. Mr. Mathrani updated the GGP board periodically during this period regarding these preliminary discussions.

On May 1, 2017, Mr. Mathrani announced on GGP’s earnings conference call that GGP was in the process of reviewing all strategic opportunities and alternatives, including potential divestitures or share buyback programs.

 

57


Table of Contents

During May, June and July 2017, GGP management, on a regular basis, fielded inbound inquiries and initiated, pursued and participated in preliminary in-person and telephonic discussions with senior executives of several premier U.S., non-U.S. and multinational financial sponsors, investment companies and financial institutions and companies that operate in the retail property industry and related industries regarding potential strategic opportunities and alternatives that could complement, enhance or expand GGP’s business or that might otherwise offer growth opportunities for GGP, including, among others, potential asset-level joint-venture transactions and potential third-party equity investments in GGP. During this time, GGP management also followed up with potential counterparties on certain discussions that had taken place during January through March 2017. Mr. Mathrani updated the GGP board periodically during this period regarding these preliminary discussions.

On June 2, 2017, at a regular meeting of the GGP board, GGP management (i) discussed with the GGP board recent developments and negative changes to market conditions in the retail property industry and presented the GGP board with further revised projections for GGP’s 2017 financial performance, which had been adjusted downward once again to reflect 1.0% projected growth in GGP’s net operating income, 1.6% projected growth in GGP’s EBITDA, 2.1% projected growth in GGP’s funds from operations and 2.8% projected growth in GGP’s funds from operations per share, as well as revised five-year projections based on a number of changes to GGP management’s forecasts, which reflected projected funds from operations of $1,553 million in 2018, $1,626 million in 2019, $1,748 million in 2020, $1,843 million in 2021 and $1,940 million in 2022, (ii) reviewed with the GGP board the analysis prepared by GGP management and GGP’s advisors regarding potential strategic opportunities and alternatives and (iii) updated the GGP board with respect to the preliminary discussions GGP management participated in up to such point in time in connection with GGP’s review of these opportunities and alternatives, none of which had progressed beyond preliminary stages.

During July 2017, representatives of BPY, affiliates of BPY and certain joint-venture partners thereof discussed with GGP management the possibility of such parties acquiring a portfolio of malls from GGP in exchange for securities held or controlled by such parties or a combination of cash and securities, which potential transaction we refer to as the property-for-securities exchange transaction. GGP and such parties did not agree on value and terminated these discussions. Also during such time, representatives of BPY initiated preliminary discussions with GGP management and potential third-party sources of equity financing and potential co-investors regarding a potential interest on the part of BPY or one or more of its affiliates, together with such third party or third parties, in acquiring the shares of GGP common stock held by the unaffiliated GGP common stockholders. These preliminary discussions did not progress beyond early stages, and therefore were not raised at any GGP board meetings, because of the lack of interest from potential sources of equity financing and potential co-investors. BPY did not at this time make any acquisition proposal or provide any indicative pricing in connection with its acquisition interest beyond outlining the amount of funds that might be needed to acquire such shares of GGP common stock at the then-existing market prices.

On July 24, 2017, at a regular meeting of the GGP board, upon recommendation of GGP management, the GGP board determined to approve a potential sale of interests in two of GGP’s properties at a projected sales price and capitalization rate consistent with GGP management’s expectations for the net asset value of GGP’s portfolio. At such meeting, certain members of the GGP board discussed that the result of the sales process with respect to such properties could provide GGP with a helpful indication as to the potential private market valuation of other comparable assets in GGP’s portfolio because, at such time, GGP management, taking into account certain macro and micro economic and industry trends, existing data regarding sales per square feet and other factors deemed relevant in their professional judgment and experience, believed such properties, which, compared to GGP’s other Class A retail properties, had substantially average sales per square foot, tenant mix, market characteristics and blended remaining lease term, were representative, from a valuation perspective, of GGP’s portfolio of Class A retail properties (defined primarily by sales per square foot during 2017). Subsequently, based on market conditions and other factors, GGP management determined to take to market only one of these two GGP properties. Also at such meeting, GGP management (i) updated the GGP board with respect to the property-for-securities exchange transaction, (ii) updated the GGP board with respect to the

 

58


Table of Contents

preliminary discussions GGP management participated in to date in connection with GGP’s review of strategic opportunities and alternatives, none of which had progressed beyond preliminary stages, and (iii) discussed with the GGP board prevailing market conditions and GGP’s prospects as a standalone company. Following such updates and discussion, the GGP board determined, taking into account a number of factors including, among others, the GGP board’s view as to prevailing market conditions based on discussions with GGP management, and the GGP board’s expectations with respect to the prospects of GGP as a standalone company in light of the projections presented to the GGP board by GGP management, to instruct GGP management to focus on continuing to operate GGP as a standalone company in accordance with its long-term plan, but also instructed GGP management not to definitively terminate any ongoing preliminary discussions or foreclose new discussions with respect to potential strategic opportunities and alternatives that could complement, enhance or expand GGP’s business or that might otherwise offer growth opportunities for GGP. During the period following the announcement of GGP’s exploration of strategic opportunities and alternatives on May 1, 2017 and this determination by the GGP board, no third party had demonstrated to GGP or its advisors a willingness or ability to acquire all of GGP or a substantial portion of its assets. Mr. Mathrani, pursuant to the GGP board’s instructions, subsequently announced on GGP’s earnings conference call on August 2, 2017 that, following a review by GGP of potential strategic opportunities and alternatives, GGP had concluded that it was in the best interests of GGP and its stockholders to continue as a standalone company at such time.

On September 19, 2017, at a regular meeting of the GGP board, GGP management presented to the GGP board further revised projections for GGP’s 2017 financial performance, which had improved to reflect 1.5% projected growth in GGP’s net operating income and 2.3% projected growth in GGP’s EBITDA, but also had been revised downward to reflect 1.8% projected growth in GGP’s funds from operations and 2.1% projected growth in GGP’s funds from operations per share. At this meeting, GGP management also presented to the GGP board an adjusted five-year forecast, which reflected projected funds from operations of $1,552 million in 2018, $1,652 million in 2019, $1,770 million in 2020, $1,844 million in 2021 and $1,940 million in 2022.

Between July 24, 2017 and the end of September 2017, GGP management participated in discussions with certain third parties that were follow-ups to those that had taken place during January through July 24, 2017, but no such discussions further progressed beyond a preliminary stage.

On October 4, 2017, GGP management provided the GGP board with a preliminary net asset valuation of GGP (on a portfolio basis) based on GGP’s June 30, 2017 balance sheet, which implied a range of net asset values for GGP of $28.43 per share at the high end of the range at an implied capitalization rate of 5.0%, $25.29 per share at the middle of the range at an implied capitalization rate of 5.4%, and $22.73 per share at the low end of the range at an implied capitalization rate of 5.8%, as compared to the closing price of GGP common stock on such date of $21.15 at an implied capitalization rate of 6.0%.

On October 6, 2017, certain affiliates of BPY exercised all of their respective warrants to acquire additional shares of GGP common stock. The exercise price per share was $8.3621 with respect to 56,178,901 million underlying shares of GGP common stock and $8.1678 with respect to 21,123,856 underlying shares of GGP common stock. The right to exercise these warrants was set to expire as of November 9, 2017. Warrants to acquire an aggregate of 55,296,573 shares of GGP common stock were settled using the full physical settlement method (which required the applicable holder of the warrants to pay, in cash, the aggregate exercise price applicable to the warrants held thereby) because the terms of the warrants required physical settlement and did not permit net settlement. Warrants to acquire an aggregate of 22,006,185.41 shares of GGP common stock were settled using the net share settlement method (pursuant to which GGP withheld an aggregate of 8,482,487.40 shares of GGP common stock, valued at the closing price for the GGP common stock on October 6, 2017 of $21.21, to satisfy the aggregate exercise price, issued to the applicable holder 13,523,695 shares of GGP common stock and paid cash to the applicable holder for fractional shares of GGP common stock). The exercise resulted in BPY and its affiliates increasing their aggregate ownership in GGP from approximately 29% to approximately 34%.

 

59


Table of Contents

On November 10, 2017, Brian Kingston, the chief executive officer of Brookfield Property Group LLC, which we refer to as BPG, called Daniel Hurwitz, a non-management, independent member of the GGP board who is not affiliated with BPY, and informed Mr. Hurwitz that BPY or its affiliate expected to deliver a non-binding proposal to the GGP board with respect to a proposed acquisition of GGP by BPY.

On November 11, 2017, representatives of BPY delivered to the GGP board a written, non-binding proposal addressed to the GGP board to acquire the shares of GGP common stock held by the unaffiliated GGP common stockholders, in exchange for the right of each holder of GGP common stock to elect to receive consideration per share of GGP common stock of either 0.9656 of a BPY unit or $23.00 in cash, subject to proration based on a maximum of approximately 309 million BPY units to be issued and a maximum aggregate cash consideration of approximately $7.4 billion, reflecting a mix of consideration as of the date of such proposal consisting of 50% cash and 50% BPY units. We refer to such proposal as the November 11 proposal. The November 11 proposal indicated that the offer price reflected a premium of 21% to the unaffected closing share price of GGP common stock of $19.01 on November 6, 2017, the last completed trading day before the first reported rumor of a potential acquisition of GGP by BPY.

On November 11, 2017, GGP retained Citigroup Global Markets Inc., which we refer to as Citigroup, as a financial advisor to GGP management to assist with the proposed transaction, which engagement was subsequently formalized in an engagement letter dated January 5, 2018. Citigroup was retained at the request of GGP management to be available to provide financial advisory services and support GGP management, as needed.

On November 12, 2017, the GGP board held a telephonic special meeting, at which representatives of Sullivan & Cromwell LLP, legal advisor to GGP, which we refer to as Sullivan & Cromwell, and Simpson Thacher & Bartlett LLP, which we refer to as Simpson Thacher, were present, to discuss the November 11 proposal. At this meeting, the GGP board resolved to establish the special committee, consisting entirely of the non-management, independent members of the GGP board, Mary Lou Fiala, Janice R. Fukakusa, John K. Haley, Daniel B. Hurwitz and Christina M. Lofgren. The GGP board resolved to empower the special committee to, among other things, solicit any expressions of interest or other proposals from BPY with respect to the November 11 proposal or from other third parties with respect to potential alternative transactions, establish and direct the process and procedures related to any negotiation with BPY and any review and evaluation of the November 11 proposal or any alternative transactions with third parties, to make any related investigations, to retain legal and financial advisors, to evaluate the terms of any such proposal, negotiate with BPY or other third parties and their respective representatives with respect to any proposal and the terms of any proposed definitive agreements relating to such proposals, and to report to the GGP board the special committee’s recommendations and conclusions with respect to the November 11 proposal or any alternative proposal, including a determination and recommendation as to whether such proposal or transaction would be fair to and in the best interests of the unaffiliated GGP common stockholders and should be approved by the GGP board. The GGP board also resolved to empower the special committee to determine not to pursue the November 11 proposal or any alternative proposal or transaction.

On November 12, 2017, the special committee retained Goldman Sachs & Co. LLC, which we refer to as Goldman Sachs, as its financial advisor in connection with the proposed transaction. Goldman Sachs was chosen because it is an internationally recognized investment banking firm that has substantial industry experience and experience in transactions similar to the transaction proposed by BPY and based on the special committee’s determination of Goldman Sachs’ independence from BPY, GGP and their respective management. Prior to its engagement, on November 11, 2017, Goldman Sachs confirmed to the special committee that it had not recognized any fees for financial advisory and underwriting services provided by its investment banking division to GGP over the previous two years (but indicated that Goldman Sachs is one of the lenders under GGP’s revolving credit facility). Goldman Sachs also provided the special committee with a summary of the financial advisory and underwriting services provided by its investment banking division to BPY and its affiliates over the previous two years (and indicated that Goldman Sachs has existing lending relationships with affiliates of BPY).

 

60


Table of Contents

For more information on the services provided by the investment banking division of Goldman Sachs to affiliates of BPY, see the section entitled “Special FactorsOpinion of Goldman Sachs & Co. LLC” beginning on page [] of this joint proxy statement/prospectus and Annex D of this joint proxy statement/prospectus. On November 12, 2017, the special committee formally retained Simpson Thacher as its legal advisor in connection with the proposed transaction. Simpson Thacher was chosen because it has experience in transactions similar to the transaction proposed by BPY and based on the special committee’s determination of Simpson Thacher’s independence from BPY, GGP and their respective management.

On November 13, 2017, BPY disclosed the November 11 proposal in a press release and an amendment to its Schedule 13D, and issued an investor presentation describing the November 11 proposal. Also on November 13, 2017, GGP issued a press release disclosing the receipt of the November 11 proposal.

On November 15, 2017, the GGP board held a telephonic special meeting, at which representatives of Goldman Sachs, Sullivan & Cromwell LLP and Simpson Thacher were present. Mr. Richard Clark, the chairman of BPY, Mr. Bruce Flatt, the chief executive officer of BAM, and Mr. Kingston recused themselves from the meeting. At this meeting of the GGP board, Mr. Hurwitz provided the GGP board with a summary of his discussions with representatives of BPY in the days leading up to and following the submission of the November 11 proposal, during which discussions Mr. Kingston had advised Mr. Hurwitz that a proposal would be forthcoming shortly, but had not discussed with Mr. Hurwitz the form, proposed price or other terms of the expected proposal prior to the submission thereof. Representatives of Simpson Thacher discussed with the GGP board and the special committee the fiduciary duties of the directors of GGP under applicable law, as well as other potential issues and considerations in connection with the GGP board’s evaluation of the November 11 proposal, including in light of BPY’s existing ownership in GGP and BPY’s (and its affiliates’) representatives on the GGP board. The GGP board discussed the roles of Goldman Sachs and Simpson Thacher, respectively, in connection with the evaluation of the proposal, as well as the process with respect to related financial and legal due diligence and analysis. Representatives of Goldman Sachs then discussed the possible next steps with respect to the analysis of the proposal and other strategic alternatives by the special committee and its legal and financial advisors. The GGP board then discussed a number of questions relating to a potential transaction with BPY, and representatives of Goldman Sachs discussed with the GGP board the preliminary financial projections for GGP prepared by GGP management and the relative performance of the stock price of GGP and BPY. Representatives of Goldman Sachs also discussed with the GGP board the management structure and recent performance of BPY.

Following this meeting of the GGP board, also on November 15, 2017, the special committee held a telephonic meeting at which representatives of Goldman Sachs and Simpson Thacher were present. The special committee discussed with representatives of Goldman Sachs and Simpson Thacher:

 

    the special committee’s views of GGP’s plans as a standalone company in the absence of a strategic transaction, based upon GGP management’s forecasts and view of recent market conditions as previously presented to the GGP board by GGP management, which forecasts had been revised downward in several respects throughout the course of the year, including with respect to projected funds from operations for 2018 and 2019, from the forecasts presented by GGP management to the GGP board at the beginning of 2017;

 

    a presentation made by representatives of Goldman Sachs to the special committee regarding the process undertaken in certain recent precedent transactions involving acquisition proposals from a significant stakeholder in the target company;

 

    potential strategic opportunities and alternatives for GGP in lieu of a transaction with BPY and the process of reviewing strategic opportunities and alternatives in light of the November 11 proposal; and

 

    potential next steps and potential responses to the November 11 proposal.

The special committee met again on November 17, 2017, with representatives of Simpson Thacher and Goldman Sachs present at the meeting. Representatives of Goldman Sachs discussed with the special committee the November 11 proposal, and members of the special committee discussed potential next steps.

 

61


Table of Contents

At this meeting, the special committee discussed with representatives of Goldman Sachs, among other things:

 

    the recent performance of GGP common stock as well as the stock price of certain other companies, and the special committee’s concern that the trading price of GGP common stock reflected the announcement of the November 11 proposal and did not yet reflect GGP management’s expectations as to the projected financial performance of GGP during 2018, which expectations had been revised downward in a number of respects over the course of 2017 and not yet publicly disclosed;

 

    a potential timeline presented by representatives of Goldman Sachs with respect to the process of evaluating or negotiating a proposed acquisition of GGP;

 

    possible responses to the November 11 proposal; and

 

    a range of potential metrics related to a valuation of GGP common stock.

Following such presentation, the special committee then discussed at this meeting that additional information would be helpful to the special committee in evaluating the November 11 proposal. The special committee and representatives of Simpson Thacher and Goldman Sachs discussed the potential timing and nature of a response to BPY. The special committee then agreed, after discussions with representatives of Goldman Sachs, that Mr. Hurwitz would contact representatives of BPY on behalf of the special committee to confirm that the special committee was evaluating the November 11 proposal.

On November 29, 2017, the GGP board held a previously scheduled regular meeting at the offices of Sullivan & Cromwell in New York, at which representatives of Sullivan & Cromwell were present. At this meeting, GGP management discussed with the GGP board the worsening market environment in which GGP operated and presented to the GGP board further revised projections for GGP’s 2017 financial performance, which had been reduced to reflect 1.3% projected growth in GGP’s net operating income, 1.2% projected growth in GGP’s EBITDA and 1.5% projected growth in GGP’s funds from operations per share. At this meeting, GGP management also presented to the GGP board the projections prepared by GGP management with respect to GGP’s 2018 financial performance, which reflected -0.2% projected growth in GGP’s net operating income, 0.0% projected growth in GGP’s EBITDA and -4.7% projected growth in GGP’s funds from operations per share. GGP management also presented revised 5-year projections which reflected projected funds from operations of $1,439 million in 2018, $1,478 million in 2019, $1,581 million in 2020, $1,713 million in 2021 and $1,785 million in 2020.

Following discussion of a number of matters unrelated to the November 11 proposal, Messrs. Clark, Flatt, Kingston and Mathrani and the representatives of Sullivan & Cromwell recused themselves from the meeting, and the members of the special committee were joined by representatives of Goldman Sachs and Simpson Thacher. Representatives of Simpson Thacher reviewed with the members of the special committee their fiduciary duties under applicable law, and the special committee proceeded to discuss the terms of the November 11 proposal with representatives of Goldman Sachs and Simpson Thacher. Following such discussion, representatives of Goldman Sachs and Simpson Thacher left the meeting, and Messrs. Clark, Flatt, Kingston and Mathrani and the representatives of Sullivan & Cromwell rejoined the meeting to continue the discussion by the GGP board of certain matters unrelated to the November 11 proposal.

On December 4, 2017, the special committee held a meeting at which representatives of Goldman Sachs and Simpson Thacher were present. At this meeting, representatives of Goldman Sachs made a presentation to the special committee with respect to:

 

    the terms of the November 11 proposal;

 

   

certain draft projections prepared by GGP management for GGP on a standalone basis, which GGP management had revised downward several times throughout the year of 2017 in a number of respects, including with respect to projected funds from operations for 2018, and which reflected GGP

 

62


Table of Contents
 

management’s expectation that GGP’s financial performance was deteriorating and that GGP’s results for 2018 would fall short of its 2017 results and would not meet current consensus analyst estimates presented by Goldman Sachs in a number of respects, including with respect to net operating income and funds from operations;

 

    the preliminary financial analysis prepared by Goldman Sachs of GGP on a standalone basis based on a number of methodologies;

 

    a preliminary review of certain strategic opportunities and alternatives, including a sale of selected assets, a spin-off of selected assets, a sale of GGP to an alternative strategic buyer or a sale of GGP to a financial buyer in a leveraged buyout transaction;

 

    certain factors for consideration with respect to the proposed consideration contemplated in the November 11 proposal; and

 

    certain potential responses to BPY.

Following such presentation, the special committee discussed these matters with representatives of Goldman Sachs. The special committee also discussed with Goldman Sachs that many of GGP’s existing common stockholders would be less likely to be long-term holders of BPY units under BPY’s current structure, including as a result of:

 

    BPY’s structure as an externally managed non-U.S. publicly traded partnership rather than an internally managed U.S. REIT like GGP;

 

    the diverging investment objectives between the GGP common stock and BPY units; and

 

    a lack of index overlap.

At the meeting, the special committee further discussed these factors, BPY’s governance structure, certain potential tax considerations and the special committee’s concern that existing GGP common stockholders may be subject to restrictions that make it difficult to hold equity interests in a non-U.S. publicly traded partnership, have a preference for holding shares of a U.S. REIT as opposed to a non-U.S. publicly traded partnership. Representatives of Goldman Sachs discussed potential factors that might affect the likelihood of negotiating a higher offer following an initial proposal, and discussed potentially interested third parties. The special committee and representatives of Goldman Sachs also discussed:

 

    the potential accretive/dilutive impact of the November 11 proposal on holders of BPY units; and

 

    expectations with respect to BPY’s capacity to consummate a transaction structured as an all-cash sale, and comments made by representatives of BPY that BPY would not be willing to contemplate an all-cash transaction.

Following such discussion, the special committee then, after discussions with representatives of Goldman Sachs, determined to inform BPY that the November 11 proposal was not acceptable, but was willing to consider entertaining an improved offer. Representatives of Goldman Sachs and Simpson Thacher discussed with the special committee drafts of a response letter and the terms of a draft non-disclosure agreement to be proposed to BPY, as well as the existing standstill agreement between certain affiliates of BPY and GGP.

Later on December 4, 2017, Mr. Hurwitz sent the special committee’s written response to the November 11 proposal to BPY, which provided that the special committee had determined, with the assistance of its legal and financial advisors, that the November 11 proposal was not in the best interest of GGP and its stockholders based on both the value and the form of consideration. The letter further stated that the special committee would be willing to entertain discussions premised on an enhanced valuation and a shift in the form of consideration, and requested additional information about BPY’s proposed financing of its potential acquisition of GGP in order to evaluate the certainty of the proposal.

 

63


Table of Contents

During the week of December 4, 2017, Mr. Hurwitz and Mr. Mathrani had telephone conversations with Mr. Kingston, during which Mr. Kingston described certain proposed elements of a potential transaction between BPY and GGP, including BPY’s corporate structure, the proposed acquisition entity, certain proposed due diligence efforts to be undertaken by BPY, as well as certain plans by BPY to obtain asset-level financing by negotiating potential joint venture investments by third parties with respect to certain assets of GGP in connection with such a potential transaction.

On December 6, 2017, GGP and BPY executed a non-disclosure agreement, which expressly preserved the terms of the existing standstill agreement between certain affiliates of BPY and GGP. See the section entitled “—Certain Related Party Agreements between GGP and the Brookfield Filing Persons” below for a description of the standstill agreement. Following the execution of the non-disclosure agreement, GGP provided representatives of BPY and its potential financing sources with access to an online data room. Following such date, BPY and its potential financing sources began conducting due diligence with respect to the assets of GGP, which process continued through March of 2018. During such time, GGP continued to provide additional information in response to requests from representatives of BPY.

The special committee met again telephonically on December 8, 2017, with representatives of Goldman Sachs and Simpson Thacher. At the meeting, Mr. Hurwitz informed the special committee of his recent discussions with Mr. Mathrani and with Mr. Kingston described above, and the special committee discussed, among other things:

 

    potential strategies with respect to a possible revised offer from BPY; and

 

    the expected timing of a response from BPY in light of the asset-level financing efforts that BPY had commenced.

Following such discussion, the special committee then discussed in executive session with representatives of Simpson Thacher the possibility of establishing a retention plan with respect to GGP management, if appropriate, in order to address the risk of disruption to GGP’s business that might result from management departures upon the announcement of a potential transaction and prior to the consummation of such a transaction. The special committee then instructed Simpson Thacher to review certain considerations with respect to compensation and GGP equity award matters. At this meeting, the special committee also determined to engage an independent compensation consultant, and to engage a strategic communications firm.

Later that week, Mr. Hurwitz had a telephonic discussion with Mr. Kingston with respect to the status of BPY’s financial and legal due diligence. During this discussion, Mr. Hurwitz and Mr. Kingston discussed potential concerns that the then-current GGP stockholders may have with respect to receiving BPY units in a potential transaction, and Mr. Kingston informed Mr. Hurwitz that BPY would not be able to agree to a potential transaction structure involving an issuance of equity interests in BAM to GGP stockholders without BAM’s support, unlike the proposed issuance of BPY units. Messrs. Hurwitz and Kingston also discussed GGP’s current and projected financial performance and the special committee’s continued preference for a significantly enhanced cash consideration as part of any potential future proposal from BPY.

On December 14, 2017, the special committee met telephonically with representatives of Goldman Sachs and Simpson Thacher. At the meeting, representatives of Goldman Sachs made a presentation to the special committee with respect to:

 

    a recent proposed transaction in the real estate industry;

 

    related market reactions; and

 

    potential implications on a potential transaction between GGP and BPY.

The special committee discussed these matters, and Mr. Hurwitz updated the special committee about his recent discussions with Mr. Kingston. During this meeting, the special committee determined after discussions

 

64


Table of Contents

with representatives of Goldman Sachs that, having not received an acceptable proposal to date from BPY, it was premature for the special committee to instruct its advisors to commence a process of conducting reverse legal and financial due diligence on BPY unless and until a revised offer from BPY was received that the special committee would deem sufficiently attractive to pursue such a process.

On January 5, 2018, the special committee held a telephonic meeting at which representatives of Goldman Sachs and Simpson Thacher were present. At the meeting, representatives of Goldman Sachs updated the special committee on the scope and timing of the due diligence undertaken to date by BPY with respect to a potential transaction between BPY and GGP, as well as recent discussions that representatives of Goldman Sachs had with representatives of BPY with respect to the expected timing of a revised offer from BPY and the status of BPY’s efforts to obtain equity and debt financing for such a potential transaction. The special committee discussed with representatives of Goldman Sachs, among other things:

 

    a discussion that Mr. Hurwitz had earlier that day with Mr. Mathrani about GGP’s year-end financial performance and expected 2018 financial performance, which GGP management expected to fall below GGP’s 2017 financial performance in a number of respects;

 

    the recent net asset value valuation of GGP by GGP management, which had been revised downward from the valuation previously presented to the GGP board by GGP management on October 4, 2017, and

 

    market trends in the mall REIT industry, including rising interest rates, and the expectation of GGP management that such trends continued to put pressure on valuations generally, including any valuation of GGP, and the special committee’s expectation that if the special committee terminated the process with BPY, GGP’s share price might decline to, or below, its unaffected stock price of November 6, 2017 (the last completed trading day before the first reported rumor of a potential acquisition of GGP by BPY).

After representatives of Goldman Sachs had left the meeting, representatives of the special committee’s independent compensation consultant, FW Cook, joined the call and discussed with the special committee certain matters relating to management compensation typically considered in connection with acquisitions such as the potential transaction involving GGP. Representatives of Simpson Thacher discussed with the members of the special committee their fiduciary duties under applicable law in connection with a potential transaction, including with respect to certain management compensation matters, and discussed an overview of potential impact on management compensation and GGP equity awards in connection with a potential transaction, including the expected impact on severance benefits, the potential treatment of GGP equity awards, and the potential impact of such treatment on the overall economics of a potential transaction from the perspective of GGP and a potential acquiror such as BPY. At this meeting, the special committee considered such matters and did not make any substantive determinations with respect to compensation or benefits matters or the proposed treatment of GGP equity awards in connection with a potential transaction.

During the following week, Mr. Hurwitz called Mr. Kingston to discuss timing of any expected revised offer from BPY.

The special committee met again telephonically on January 17, 2018. Representatives of Goldman Sachs and Simpson Thacher were present at the meeting. Mr. Hurwitz informed the special committee of his recent discussion with Mr. Kingston, and the special committee discussed with representatives of Goldman Sachs the prospects of GGP if it were to continue to operate on a standalone basis, including in light of market developments such as rising interest rates and the potential impact of increased capital expenditures and tenant allowances in a rising interest rate environment.

On January 30, 2018, the process with respect to a proposed sale of interests in one of the properties authorized by the GGP board in July of 2017, which concluded with the receipt of a proposal for the property that

 

65


Table of Contents

GGP management had taken to market that was below the sales price and capitalization rate authorized by the GGP board on the basis of management’s view of the net asset value of such property as of July of 2017, causing the special committee to be concerned that the valuations and capitalization rates implied by such a proposal put pressure on the net asset value of GGP’s portfolio more generally, which had been consistent with GGP management’s projected valuation. Taking into account these factors and the fact that any proceeds received from such a sale of interests would not meaningfully impact GGP’s operations, the investment committee of the GGP board did not approve the sale on the basis of such proposals.

On February 2, 2018, Mr. Kingston called Mr. Hurwitz to further discuss the timing of a revised proposal from BPY. Mr. Kingston noted BPY’s financing efforts in light of the private market valuation of certain GGP properties, which valuation appeared to be lower than BPY and GGP had expected. Messrs. Kingston and Hurwitz also discussed the status of BPY’s financial and legal due diligence. During this call, Mr. Hurwitz reiterated the concerns that the special committee had previously communicated about entering into a transaction that provided for a substantial portion of the consideration to consist of BPY units, in light of the special committee’s concern, after its discussions with GGP management and Goldman Sachs, that GGP common stockholders who were focused on investments in U.S. REIT securities may not consider BPY units to be an attractive security. Mr. Kingston informed Mr. Hurwitz of BPY’s progress in developing a revised proposal intended to address this concern, which contemplated creating a new U.S. REIT security that would form part of the consideration of BPY’s revised proposal in order to provide holders of GGP common stock with a potential U.S. REIT security alternative to an investment in BPY units.

On February 5, 2018, representatives of Weil, Gotshal & Manges LLP, which we refer to as Weil, and Goodwin Procter, which we refer to as Goodwin, each legal advisors to BPY, circulated a draft term sheet to representatives of Goldman Sachs and Simpson Thacher, setting forth the proposed material terms of the class A stock of the proposed new U.S. REIT security. The term sheet provided that class A stock would be a new non-voting REIT security, that each share of class A stock was intended to provide its holder with a dividend and economic return equivalent to that of a BPY unit, and that class A stock would be structured to mirror the BPY units. The term sheet provided that dividends on class A stock would be equivalent to those paid on BPY units, shares of class A stock would be exchangeable for BPY units on a one-for-one basis following the one-year anniversary of the closing of the proposed transaction between GGP and BPY, and GGP and BPY would be subject to substantially equivalent governance provisions. The term sheet also provided that the request to exchange a share of class A stock for one BPY unit may be settled in cash equal to the value of one BPY unit, or, at the option of BPY, in the form of BPY units. Later that day, representatives of Weil and Goodwin discussed the terms of the proposed class A stock with representatives of Goldman Sachs and Simpson Thacher.

Later on February 5, 2018, the special committee met telephonically with representatives of Goldman Sachs and Simpson Thacher. At this meeting, Mr. Hurwitz provided the special committee with an update on his discussions with Mr. Kingston on February 2, 2018. The members of the special committee discussed with representatives of Goldman Sachs, among other things:

 

    an initial overview of the proposed terms of class A stock;

 

    an initial overview of the governance structure of BPR;

 

    an initial overview of the structure and process of the proposed transaction;

 

    an update from representatives of Goldman Sachs on recent discussions with representatives of BPY with respect to the status of BPY’s equity financing efforts involving potential third party asset-level joint venture investors and the special committee’s concerns with respect to the implications of the preliminary results of these efforts on the net asset value of GGP; and

 

   

the results of the process with respect to a proposed sale of interests in one of the properties authorized by the GGP board in July of 2017 concluded with the receipt of a proposal for the property that GGP management had taken to market that was below the sales price and capitalization rate authorized by

 

66


Table of Contents
 

the GGP board on the basis of management’s view of the net asset value of such property as of July of 2017, and the special committee’s concerns with the implications on the potential private market valuations of comparable assets in GGP’s portfolio if the net asset value of GGP were to be generally extrapolated from the valuations and capitalization rates proposed in connection with these marketing efforts.

At this meeting, the special committee also discussed the extent to which the inclusion of class A stock as part of the consideration in the proposed transaction with BPY would mitigate the concerns that the special committee had discussed on December 4, 2017 with respect to the desirability of BPY units to certain current GGP common stockholders who were focused on investments in U.S. REIT securities, and the special committee determined after discussions with representatives of Goldman Sachs that, if the special committee would receive a revised proposal from BPY that the special committee considered to be a meaningfully improved offer, the special committee would authorize Goldman Sachs and Simpson Thacher to commence the process of conducting due diligence on BPY, whereas such due diligence on BPY remained premature unless and until such an improved offer was received.

On February 9, 2018, at the direction of the special committee, representatives of Goldman Sachs and Simpson Thacher sent written questions to representatives of Weil and Goodwin with respect to the proposed terms of class A stock, including with respect to certain structural questions, the treatment of fees under the proposed master services agreement between BAM and BPR, the expected index eligibility of class A stock, the expected tax impact on GGP common stockholders as a result of receiving class A stock, as well as questions relating to the proposed economic equivalency between class A stock and BPY units and the exchange right, including BPY’s proposal that the exchange right would not commence until one year following the closing of the merger.

On February 15, 2018, representatives of Weil and Goodwin responded in writing, indicating among other things that BPY would be willing to discuss reducing the waiting period during which class A stock cannot be exchanged into BPY units from one year following the closing of the proposed transaction to less than one year following the closing.

Also on February 15, 2018, Mr. Hurwitz met with Messrs. Kingston and Flatt to discuss the expected timing of a revised offer from BPY. At the meeting, Messrs. Kingston and Flatt noted the challenges faced by BPY in finalizing the third-party asset-level financing for the proposed transaction in light of the valuations received for certain GGP assets, which fell below BPY’s expectations, and explained BPY’s view of the benefits of including class A stock as part of the consideration for the proposed transaction. Mr. Hurwitz acknowledged BPY’s difficulty in obtaining the necessary funding for an improved offer and acknowledged that, as a result, BPY may not make a sufficiently improved offer and a transaction with BPY may not be possible.

Later that day on February 15, 2018, the special committee held a telephonic meeting attended by representatives of Goldman Sachs and Simpson Thacher. Mr. Hurwitz updated the special committee on his discussions with Messrs. Kingston and Flatt and the special committee discussed the timing of the process relating to a revised offer from BPY. The special committee also further discussed, among other things:

 

    the terms of the November 11 proposal as compared to GGP’s prospects on a standalone basis, based on expectations of GGP management previously provided to the GGP board by GGP management, which projected that GGP’s financial results in 2018 would not meet the current market consensus for such results; and

 

   

GGP’s prospects on a standalone basis if a revised offer from BPY or an alternative offer from a third party was not received, or if a revised offer from BPY was found not to be in the best interests of GGP and its stockholders, and the potential impact on the trading price of GGP common stock if the process with BPY was terminated and GGP management’s expectations with respect to GGP’s prospects were to materialize. The special committee’s expectation was that if the special committee terminated the

 

67


Table of Contents
 

process with BPY, GGP’s share price might decline to, or below, its unaffected stock price of November 6, 2017 (the last completed trading day before the first reported rumor of a potential acquisition of GGP by BPY) or lower, and that it would be in the best interests of GGP’s stockholders that GGP proceed with further discussions and negotiations with BPY.

At various times since the delivery of the November 11 proposal, representatives of Goldman Sachs encouraged representatives of BPY to incorporate a larger component of cash consideration into any revised proposal that BPY may deliver. During such discussions, BPY consistently indicated that it did not anticipate being able to make an all-cash proposal and further informed representatives of Goldman Sachs that BPY, despite significant effort and outreach by BPY, had not been able to obtain interest for a potential co-investment from a third party in connection with a joint acquisition of the GGP common stock, and therefore BPY expected that it would need to raise the cash portion of any proposed consideration from debt financing or the sale of interests in individual assets of GGP.

On February 23, 2018, representatives of BPY delivered to the special committee a revised written proposal, which we refer to as the February 23 proposal, with respect to the potential acquisition of GGP common stock not already held by BPY and its affiliates, pursuant to which each share of GGP common stock would be acquired for consideration consisting of either (i) 0.9656 BPY units or an equivalent number of newly issued shares of class A stock or (ii) $23.00 in cash, in each case subject to proration such that the unaffiliated GGP common stockholders in the aggregate would receive consideration consisting of 60% cash and 40% BPY units or shares of class A stock.

Later that day on February 23, 2018, the special committee held a telephonic meeting to discuss the February 23 proposal. Representatives of Goldman Sachs and Simpson Thacher were present at the meeting. Members of the special committee discussed their initial assessments of the February 23 proposal and instructed Goldman Sachs to prepare a preliminary analysis comparing the November 11 proposal and the February 23 proposal, which representatives of Goldman Sachs circulated to the members of the special committee later that day. The special committee also determined, after discussions with representatives of Goldman Sachs, to instruct Goldman Sachs to inform representatives of BPY that the special committee did not support the February 23 proposal. Later on February 23, 2018, representatives of Goldman Sachs spoke to Mr. Kingston to convey the special committee’s unwillingness to support the February 23 proposal. Mr. Kingston expressed surprise and emphasized that BPY had obtained commitments for approximately $9 billion in debt and equity financing over the previous months in order to propose the valuation and consideration mix that were reflected in the February 23 proposal.

In the morning of February 24, 2018, the special committee held a telephonic meeting at which representatives of Simpson Thacher were present. Representatives of Simpson Thacher reminded the members of the special committee of their fiduciary duties in light of the February 23 proposal. The special committee discussed the February 23 proposal and discussed the type and scope of further information that would be required in order to further evaluate any subsequent proposal from BPY.

Following this discussion, representatives of Goldman Sachs then joined the meeting, and reviewed with the special committee:

 

    a preliminary financial analysis of the February 23 proposal, which indicated that the February 23 proposal reflected a total offer value of approximately $14.0 billion at a blended offer price of $21.81 per share of GGP common stock based on the closing price of BPY units of $20.74 on February 23, 2018, and an implied nominal capitalization rate of approximately 5.73%, as compared to the November 11 proposal which implied a total offer value of approximately $13.8 billion at a blended offer price of $21.51 per share of GGP common stock as of November 11, 2017 and a nominal capitalization rate of approximately 5.77%;

 

    a summary of the proposed terms of class A stock based on the materials received from Weil and Goodwin on February 5, 2018 and February 15, 2018; and

 

68


Table of Contents
    a review of Goldman Sachs’s preliminary financial analysis of GGP on a standalone basis as previously presented to the special committee at the meeting on December 4, 2017 and described above.

At this meeting, members of the special committee discussed these analyses, as well as:

 

    the prospects of GGP on a standalone basis based on GGP management’s projections, which had been modestly revised from the projections previously reviewed by the special committee to reflect, among other things, actual results for January 2018, and which continued to reflect GGP management’s expectation that GGP’s 2018 financial performance would fall short of its 2017 results;

 

    potential responses to BPY, including potential counteroffers;

 

    implied nominal capitalization rates presented by representatives of Goldman Sachs based on certain potential counteroffers;

 

    certain advantages and disadvantages of including class A stock as part of the consideration as compared to the BPY units; and

 

    the need for further information with respect to BPY and class A stock.

At this meeting, representatives of Goldman Sachs and Simpson Thacher also discussed with the special committee the fact that GGP had reviewed strategic opportunities and alternatives in 2017, the potential impact of BPY’s existing ownership in GGP on other potential bidders, and the lack of interest from other potential bidders since GGP’s announcement of a review of strategic opportunities and alternatives on May 1, 2017 and since the November 11 proposal was made public on November 13, 2017. The special committee also noted then-current negative market conditions and the impact on the REIT sector of the stock market and potential impact on GGP, including the potential impact of increased capital expenditures and tenant allowances in a rising interest rate environment and GGP’s exposure to rising interest rates in light of GGP’s capital structure and financial leverage. Representatives of Goldman Sachs also discussed with the special committee the expected structure of the proposed transaction. The special committee determined, after consultation with representatives of Goldman Sachs and Simpson Thacher, that it was desirable and in the best interest of GGP and its stockholders to explore the highest offer available from BPY expeditiously in order to determine whether to proceed to the negotiation of definitive agreements with BPY or to terminate the process with BPY and allow GGP management to focus on operating GGP as a standalone business. Following further discussion with representatives of Goldman Sachs and Simpson Thacher, the special committee determined, taking into account the financial analyses presented by representatives of Goldman Sachs, to respond to BPY with a counteroffer, which provided for consideration of $24 per share of GGP common stock, consisting of 70% cash and 30% BPY units or class A stock, with the equity portion of the consideration equal to an exchange ratio based on the volume weighted average price of BPY units for the ten days leading up to the announcement of a definitive transaction. We refer to such counteroffer as the February 24 counteroffer. The special committee instructed Goldman Sachs to respond to BPY with the February 24 counteroffer. Based on the closing price of BPY units of $20.74 on February 23, 2018, the February 24 counteroffer implied a total offer value of approximately $15.5 billion at a blended offer price of $24 per share of GGP common stock and an implied nominal capitalization rate of approximately 5.43%.

Later on February 24, 2018, at the direction of the special committee, representatives of Goldman Sachs spoke to Mr. Kingston and Dan Teper, a managing director at BPG, delivered the February 24 counteroffer and requested that BPY respond expeditiously. In the afternoon of February 24, 2018, the special committee met again in a telephonic meeting attended by representatives of Goldman Sachs and Simpson Thacher, during which representatives of Goldman Sachs updated the special committee on their earlier discussions with Messrs. Kingston and Teper. Representatives of BPY subsequently informed Mr. Hurwitz that BPY was rejecting the February 24 counteroffer.

In the early afternoon of February 25, 2018, the special committee held a telephonic meeting at which representatives of Goldman Sachs and Simpson Thacher were present. Representatives of Goldman Sachs and

 

69


Table of Contents

Mr. Hurwitz reported to the special committee on their conversations with Messrs. Kingston and Teper regarding the February 24 counteroffer. Upon the request of the special committee, representatives of Goldman Sachs also presented an overview of the performance of GGP’s stock during the period since initial rumors of a potential transaction with BPY became widely circulated in November of 2017. Members of the special committee discussed, among other things:

 

    the overview of the performance of GGP’s stock presented by Goldman Sachs, which indicated that while the S&P 500 index had appreciated by approximately 6% over such period and the MSCI US REIT Index had decreased by approximately 10%, the trading price of GGP common stock had increased approximately 13% from the pre-rumor price during this period, which the special committee believed reflected in part an expectation in the marketplace that a transaction with BPY would occur and the limited visibility in the marketplace as to the projected 2018 and 2019 operating metrics of GGP as presented by GGP management to the GGP board on November 29, 2017 and did not yet reflect the potential marketplace reaction to those 2018 and 2019 projected operating metrics of GGP, projected by GGP management;

 

    the potential impact on the trading price of GGP common stock in the event that discussions with BPY were terminated; and

 

    the fact that the total offer value of the November 11 proposal had decreased as a result of the decrease in the trading price of BPY units during such period.

At this meeting, the special committee determined, after discussions with representatives of Goldman Sachs, to request that BPY present its “best and final” offer in order to allow the special committee to make a determination as to whether to engage in the negotiation of definitive documents or to terminate further discussions with BPY.

Following this meeting, on February 25, 2018, Mr. Hurwitz had a telephone call with Messrs. Kingston and Flatt to convey the special committee’s request for a best and final offer, which Messrs. Kingston and Flatt agreed to deliver to the special committee promptly.

Later that day on February 25, 2018, representatives of BPY responded by email to the members of the special committee with a revised proposal (which was subsequently formally confirmed on February 28, 2018 in a letter dated February 26, 2018), which we refer to as the final proposal, noting that such proposal constituted the best and final offer of terms under which BPY was willing to acquire GGP. The final proposal provided for consideration per share of GGP common stock, at the election of the unaffiliated GGP common stockholders and subject to proration, of up to $23.50 in cash, subject to a maximum aggregate amount of cash to be paid of $9.25 billion, with the remainder of the consideration to consist of BPY units (or shares of class A stock) at an exchange ratio of 1:1. The final proposal noted that, while BPY continued to believe the proposed transaction to be in the best interests of the GGP stockholders, that BPY believed the parties had reached a point where the process should be terminated and GGP should continue to operate as standalone public company should the terms of the final proposal not be acceptable to the special committee.

Following receipt of the final proposal, the special committee again met telephonically later that day on February 25, 2018. Representatives of Goldman Sachs and Simpson Thacher were present at the meeting. Members of the special committee discussed with representatives of Goldman Sachs, among other things:

 

    the terms of the final proposal, which implied a total offer value of approximately $14.5 billion at a blended offer price of $22.50 per share of GGP common stock and an implied nominal capitalization rate of approximately 5.63%;

 

    that the final proposal reflected an increase in the amount of aggregate cash consideration of approximately $1.9 billion from the November 11 proposal and an increase in the amount of aggregate cash consideration of $0.4 billion from the February 23 proposal;

 

70


Table of Contents
    that the final proposal reflected an increase in total offer value of approximately 4.7% from the November 11 proposal based on the then current trading price of BPY units of $20.71 on February 23, 2018;

 

    that the final proposal reflected a decrease in total offer value of approximately 1.9% from the November 11 proposal as of November 11, 2017 and that the total offer value of the November 11 proposal had decreased by approximately 6.3% since November 11, 2017 as a result of the decrease in the trading price of BPY units during the period since initial rumors of a potential transaction with BPY became widely circulated in November of 2017; and

 

    certain advantages and disadvantages of including class A stock as part of the consideration as compared to the BPY units.

Following this meeting, and taking into account these discussions and the financial analyses presented by representatives of Goldman Sachs at such meeting and prior meetings of the special committee, and noting that GGP was not subject to an exclusivity agreement with BPY and that GGP was free to entertain alternative proposals until a merger agreement between GGP and BPY, if any, was executed (which was expected to take several weeks or more), the special committee resolved in executive session, during which representatives of Simpson Thacher were present, to instruct Goldman Sachs and Simpson Thacher to commence due diligence with respect to BPY and to begin to negotiate definitive documentation for a potential transaction based on the final proposal.

In the evening of February 25, 2018, at the direction of the special committee, representatives of Goldman Sachs discussed the due diligence process with representatives of BPY and requested pro forma financial forecasts from BPY.

On February 26, 2018, at the direction of the special committee, representatives of Goldman Sachs met in New York with representatives of BPY to clarify certain terms of the final proposal, including to reflect the current number of outstanding shares of GGP common stock, the number of shares of GGP common stock held by BPY and its affiliates, and the calculation of the proposed proration mechanism, which clarification resulted in an increase to the total offer value of approximately $70 million, a decrease in the blended offer price of $0.08 per share and an increase in the implied nominal capitalization rate of approximately 0.01%, implying a total offer value of approximately $14.5 billion at a blended offer price of $22.41 per share of GGP common stock and an implied nominal capitalization rate of approximately 5.64%, in each case based on the trading price of BPY units at the time of the final proposal of $20.71 on February 23, 2018.

Beginning in the week of February 26, 2018, at the request of representatives of Sullivan & Cromwell, representatives of Simpson Thacher, Sullivan & Cromwell and GGP management held near-daily telephonic meetings in order to coordinate the negotiation of definitive documentation and the due diligence process and to discuss certain strategic and other critical matters related to the potential transaction.

During the period from announcement of the November 11 proposal until the announcement of the Transactions, representatives of Goldman Sachs had several discussions with management representatives of certain of GGP’s competitors in the retail property industry, none of which expressed any interest or ability to pursue an acquisition of GGP.

On February 27, 2018, representatives of BPY provided representatives of Goldman Sachs, Simpson Thacher and Sullivan & Cromwell with access to an online data room for purposes of conducting due diligence on BPY. Over the following weeks, those representatives engaged in a due diligence review of the information provided by BPY and BPY continued to provide additional information in response to requests from such representatives. Later on February 27, 2018, representatives of Simpson Thacher sent a draft merger agreement to Weil.

 

71


Table of Contents

On March 1, 2018, representatives of Weil delivered to Simpson Thacher a list of proposed changes to the draft merger agreement, including a proposal to entertain discussions about whether to maintain or eliminate the feature in the draft merger agreement permitting GGP stockholders to elect, subject to proration, whether to receive either (i) cash or (ii) BPY units or class A stock. Later on March 1, 2018, representatives of Simpson Thacher sent a draft of the voting and support agreement to Weil, which required the Brookfield voting parties who beneficially own shares of GGP common stock to vote in favor of the proposed transaction, and also included a provision that required BPY to vote in proportion to the vote of the unaffiliated GGP common stockholders on the approval or adoption of any superior proposal in the event the merger agreement were to be terminated and if in connection with such termination GGP were to enter into a definitive agreement with respect to a superior proposal. Over the course of the following days, representatives of Simpson Thacher discussed the terms of the draft agreements with representatives of Weil.

On March 3, 2018, the special committee held a telephonic meeting, at which representatives of Goldman Sachs and Simpson Thacher were present, to discuss the developments and the proposed changes to the draft merger agreement requested by Weil. The special committee also discussed the timing and scope of the due diligence process with representatives of Goldman Sachs. Representatives of Simpson Thacher reminded the members of the special committee of their fiduciary duties, and discussed with the special committee the proposed transaction structure suggested by Weil and Goodwin during discussions with representatives of Simpson Thacher.

Later on March 3, 2018, representatives of Goodwin circulated an outline of the proposed transaction structure, setting forth certain details of the proposed recapitalization, restructuring, special dividends and the merger, which contemplated that the consummation of the Transactions would take place over the course of three days.

On March 7, 2018, representatives of Weil sent a revised draft of the merger agreement to Simpson Thacher, which reflected a number of proposed changes, including the revision of the closing mechanics to provide that the closing would take place over three business days, the introduction of a “reverse termination fee” construct pursuant to which, in the event that BPY was unable to consummate the Transactions solely because its financing was not available, GGP’s sole recourse would be to terminate the merger agreement and receive a reverse termination fee from BPY, and an appraisal rights closing condition. The revised draft merger agreement also provided that GGP would not be permitted to pay regular dividends between the date of the agreement and the closing, nor a pro rata “stub dividend” at closing with respect to the quarter in which the closing occurred. The revised draft merger agreement did not provide for any obligations on the part of BPY to maintain in effect its committed financing or to obtain alternate financing, or to reimburse GGP in connection with its cooperation, and provided an uncapped obligation by GGP to reimburse BPY for its expenses if GGP common stockholders failed to approve the merger. The revised draft merger agreement did not provide for any representation by members of the current GGP board on the board of BPY or BPR following the closing of the Transactions. Also on March 7, 2018, representatives of Weil sent a revised draft of the voting agreement to Simpson Thacher.

On March 8, 2018, Mr. Hurwitz called Mr. Kingston to inform him that he expected GGP’s ability to pay dividends during the period pending the closing of the Transactions to be an issue of material importance to the special committee. Also on March 8, 2018, representatives of BPY sent drafts of BPY’s financing commitments to Simpson Thacher. Over the following weeks, representatives of Simpson Thacher and Sullivan & Cromwell proposed changes to the terms of these commitments to representatives of Weil.

Later that day on March 8, 2018, the special committee held a telephonic meeting. Representatives of Goldman Sachs and Simpson Thacher were present at the meeting. The members of the special committee then, among other things:

 

    discussed the recent conversations between Messrs. Hurwitz and Kingston;

 

72


Table of Contents
    discussed with representatives of Simpson Thacher the proposed changes to the draft merger agreement and the proposed transaction structure;

 

    discussed with representatives of Goldman Sachs the status of the due diligence process and potential strategies with respect to communications or responses to potential leaks; and

 

    discussed the proposed exchange right of class A stock and BPY’s proposed obligations with respect thereto.

In light of the special committee’s discussion of the proposed exchange right of class A stock with representatives of Goldman Sachs and Simpson Thacher, the special committee was concerned that the materials received from Weil and Goodwin suggested that the exchange right would enable a holder of class A stock to request cash from GGP in exchange for their class A stock, but in the absence of available cash at GGP such holder would have no recourse to BPY or its affiliates to request to exchange the class A stock for BPY units instead. The special committee was concerned, following discussion with representatives of Goldman Sachs, that such limitations to the exchange right, along with BPY’s proposal that the exchange right would be subject to an initial waiting period of potentially as long as a year, could negatively impact the value of class A stock, particularly in circumstances where the assets of GGP did not perform as well as expected and no excess cash was available at GGP. The special committee then instructed Simpson Thacher to send a revised draft of the merger agreement to Weil, reflecting the discussions with the special committee. Following this discussion, the special committee discussed the proposed treatment of GGP options and GGP equity awards pursuant to the draft merger agreement in an executive session.

On March 10, 2018, representatives of Simpson Thacher sent a revised draft of the merger agreement to Weil, which reflected, among other things, the consummation of the Transactions over the course of one day as opposed to three business days, the preservation of the election mechanic enabling GGP common stockholders to choose, subject to proration, between cash consideration and BPY units or class A stock, the ability of GGP to pay regular quarterly dividends before the consummation of the Transactions and a “stub dividend” for the quarter during which the closing were to occur, the addition of certain covenants requiring BPY to maintain its financing commitments and reimburse GGP for its cooperation with financing efforts, the deletion of the proposed appraisal rights closing condition, the addition of a closing condition providing for a solvency opinion to be delivered to the GGP board, a reverse termination fee payable by BPY equal to approximately $2.1 billion and a corresponding GGP termination fee equal to approximately $600 million. Also on March 10, 2018, representatives of Weil and Goodwin sent a summary of the proposed treatment of the various classes of GGPOP limited partnership units in connection with the Transactions, which representatives of Simpson Thacher, Sullivan & Cromwell, Weil and Goodwin subsequently negotiated over the following weeks.

On March 11, 2018, representatives of Simpson Thacher sent a revised draft of the voting agreement to Weil, and representatives of Weil sent an initial draft of the charter amendments to Simpson Thacher and Sullivan & Cromwell.

On the morning of March 12, 2018, Messrs. Hurwitz and Kingston discussed the process of negotiations to date and Mr. Kingston proposed an in-person negotiation meeting later that week.

Later on March 12, 2018, the special committee met telephonically with representatives of Goldman Sachs and Simpson Thacher to discuss the process to date and the proposed meeting with representatives of BPY. The members of the special committee discussed certain items to be addressed at the meeting, including:

 

    certain open issues in the draft merger agreement; and

 

    the proposed terms of the class A stock.

With respect to the proposed terms of the class A stock, the special committee’s discussion focused in particular on ensuring that holders of class A stock would be able to receive cash or BPY units in exchange for

 

73


Table of Contents

such class A stock even in circumstances where BPR did not have sufficient liquidity to satisfy the exchange right for cash. BPY had repeatedly informed representatives of Simpson Thacher and Goldman Sachs that the proposed transaction structure would not permit BPY to assume an express obligation to satisfy this exchange right.

During the week of March 12, 2018, representatives of Simpson Thacher, Sullivan & Cromwell, Weil and Goodwin exchanged drafts of various documents including the class B exchange agreement, the charter amendment setting forth the terms of the class A stock, the GGPOP partnership agreement, the terms of the new series A preferred stock and the terms of the various classes of GGPOP limited partnership units, the voting agreement, and the disclosure letters to the draft merger agreement, and continued to negotiate the terms of these documents.

On March 13, 2018, representatives of Weil sent a revised draft merger agreement to Simpson Thacher, which proposed that the closing would take place over two business days, GGP would not be permitted to pay dividends except for the dividend already declared on February 7, 2018, all GGP options and GGP restricted stock (both vested and unvested) would be converted into corresponding awards with respect to the class A stock maintaining the original award’s terms including with respect to vesting, the closing would be subject to the previously proposed appraisal rights closing condition, the requirement for a solvency opinion would be deleted, the BPY reverse termination fee would be equal to approximately $1.2 billion while the GGP termination fee would be equal to approximately $600 million, GGP would be subject to an uncapped obligation to reimburse BPY’s expenses if the merger agreement were to be terminated as a result of a failure to obtain the requisite stockholder approval, and there would be no representation by members of the GGP board on the board of BPY or BPR following the closing. The proposed terms of the class A stock, in particular any obligation by BPY to satisfy the exchange right, remained an unresolved issue as well.

On March 14, 2018, representatives of Weil, Goodwin, Simpson Thacher and Sullivan & Cromwell discussed and resolved a number of other open issues in the draft merger agreement and certain other draft documents.

On March 15, 2018, the special committee met in person and by telephone at the offices of Simpson Thacher in New York. Representatives of Simpson Thacher and Goldman Sachs were present in person at the meeting. The members of the special committee discussed, among other things:

 

    the open issues and proposed positions to be taken during the negotiations with BPY later that day;

 

    the recent telephone conversation between Mr. Hurwitz and Mr. Mathrani with respect to GGP management’s proposal regarding the treatment of GGP options and other GGP equity awards;

 

    potential alternatives for the treatment of such GGP equity awards in the proposed transaction and the possibility of a retention plan for GGP management;

 

    the proposed transaction structure;

 

    the proposed dividend restriction;

 

    the proposed appraisal rights closing condition; and

 

    the special committee’s concerns about the proposed terms of the exchange right with respect to the class A stock.

At this meeting, the special committee also discussed the proposed uncapped expense reimbursement obligation, the size of the BPY reverse termination fee and the GGP termination fee, which were equal to approximately $1.2 billion and $600 million in BPY’s then-latest proposal, respectively, and determined, after discussions with representatives of Goldman Sachs, to continue to consider these points to be open issues. The special committee also discussed the absence of a need to obtain board representation rights given that any BPY units or shares of class A stock obtained as consideration in the proposed transaction would have no meaningful voting rights with respect to the election of directors.

 

74


Table of Contents

Later on March 15, 2018, Mr. Hurwitz, representatives of Goldman Sachs, Simpson Thacher and Sullivan & Cromwell, Mr. Kingston, Mr. Teper and representatives of Weil and Goodwin met at the offices of Weil in New York to discuss a number of the open issues. The discussion focused on the proposed transaction structure and the proposed terms of the class A stock, and specifically the exchange right. Representatives of BPY and its advisors reiterated BPY’s position that holders of class A stock would be able to enforce the exchange right only against GGP in exchange for cash equal to the value of the corresponding number of BPY units, while BPY or its affiliates would have the right but not the obligation to elect to satisfy such exchange right by delivering BPY units to such holders instead. Mr. Hurwitz and representatives of the special committee’s advisors insisted that this proposal was unacceptable to the special committee as it would render the holders of class A stock unable to exercise the exchange right in circumstances where GGP did not have sufficient liquidity to satisfy the exchange right for cash and BPY or its affiliates elected not to issue BPY units instead. As a result, holders of class A stock might not be able to benefit from the exchange right precisely in circumstances where it would be preferable from the perspective of such holders to receive BPY units (or the equivalent value in cash) as opposed to continuing to hold class A stock. Representatives of Weil and Goodwin reiterated that the proposed transaction structure would not permit BPY to assume any express obligation to satisfy the exchange right or to guarantee that sufficient cash would be contributed to GGP to enable the satisfaction of the exchange right for cash. The parties then discussed a potential alternative structure to address this issue, which would involve a rights agreement pursuant to which BAM would agree to satisfy the exchange right in circumstances where GGP and BPY failed to satisfy such right. The parties separated to further discuss this alternative structure and the rights agreement. All other open issues remained unresolved.

Over the course of the next two days, representatives of the parties’ respective advisors continued to discuss the terms and potential concerns relating to the proposed alternative structure and the proposed rights agreement. During this time, Mr. Kingston informed representatives of Goldman Sachs that the board of directors of BAM was in the process of considering the proposed alternative structure and the proposed rights agreement.

On March 17, 2018, representatives of Weil and Goodwin delivered to Simpson Thacher and Sullivan & Cromwell a draft term sheet outlining the proposed rights agreement, pursuant to which BAM would agree to guarantee the issuance of BPY units or the delivery of cash equal to the value of such BPY units in exchange for class A stock in circumstances where BPR and BPY failed to satisfy the exchange right. The rights agreement would be administered by an independent rights agent. The term sheet also provided that BAM would receive a security interest in the assets of GGP to satisfy BAM’s exchange rights as a subsequent holder of shares of class A stock acquired by BAM in connection with the satisfaction of its exchange obligations under the rights agreement, that BAM would only be obligated to contribute a fixed amount of BPY units in the collateral account at the closing of the proposed transaction and that the rights agreement would provide for the issuance of a prorated amount of cash or BPY units if the number of outstanding shares of class A stock were to exceed the number of BPY units in the collateral account at any time, that the collateral account would be held by a bankruptcy remote entity, and that the rights agreement would terminate on the third anniversary of the closing of the proposed transaction.

On March 18, 2018, the parties’ advisors discussed the proposed rights agreement. Representatives of Simpson Thacher rejected the proposals with respect to the security interest, the proration in the event insufficient BPY units were available in the collateral account, the use of a bankruptcy remote entity, as opposed to BAM, as the counterparty, and the proposed three-year term of the rights agreement, and requested that the arrangement provide for all BPY units in the collateral account to be registered and freely tradable from and after the closing of the proposed transaction and for the exchange right to be effective immediately upon the closing of the proposed transaction.

On March 19, 2018, the special committee met telephonically with representatives of Goldman Sachs and Simpson Thacher to discuss the open issues, including the terms of the rights agreement. The special committee determined, after discussions with representatives of Goldman Sachs, that the open issues would need to be resolved and the proposed transaction structure, including the rights agreement, would need to be finalized before

 

75


Table of Contents

the special committee would be willing to determine whether to recommend the proposed transaction with BPY to the GGP board. With respect to the rights agreement, the members of the special committee also:

 

    considered the proposed three-year term of the rights agreement, which the special committee determined to be insufficient to provide meaningful certainty to holders of class A stock; and

 

    discussed with representatives of Goldman Sachs the potential impact of the terms of the rights agreement on the trading price of class A stock during the term of the rights agreement.

Following such discussions, the special committee met in executive session with representatives of Simpson Thacher, who reminded the members of the special committee of their fiduciary duties under applicable law.

On March 19, 2018, representatives of Simpson Thacher sent a revised draft of the merger agreement to Weil, which did not reflect any material concessions on the material open issues. Throughout the next several days, representatives of the parties’ respective advisors continued to discuss open issues and the terms of the rights agreement.

On March 20, 2018, representatives of Weil and Goodwin sent a revised term sheet with respect to the rights agreement to Simpson Thacher and Sullivan & Cromwell, which agreed to the deletion of the proposed security interest construct, removed the proposed bankruptcy remote entity and provided that BAM would be the counterparty in the arrangement instead, provided that the closing of the proposed transaction would be subject to a shelf registration statement ensuring that the BPY units in the collateral account would be freely tradable, and proposed to extend the term of the rights agreement from three years to five years, commencing at the closing of the proposed transaction. The term sheet did not provide for an obligation by BAM to contribute additional cash or BPY units into the collateral account in the future.

Also on March 20, 2018, the members of the special committee conducted a business due diligence call with Mr. Kingston relating to BPY’s business.

Later that day on March 20, 2018, the special committee held a telephonic meeting at which representatives of Goldman Sachs and Simpson Thacher were present. Members of the special committee discussed the due diligence call with Mr. Kingston and the open issues on the draft merger agreement and the terms of the rights agreement. The special committee acknowledged BAM’s proposal to extend the term of the rights agreement to five years, but determined that this period was still insufficient given that the exchange right was not subject to a limited term, and members of the special committee also expressed concern that BAM had rejected the request for an obligation to contribute additional cash or BPY units in order to maintain the collateral account at a level sufficient to account for future increases in the number of class A shares outstanding or changes to the conversion factor between the class A stock and the BPY units. Upon discussion with representatives of Goldman Sachs and Simpson Thacher, the special committee instructed Mr. Hurwitz to call Mr. Kingston to convey that the special committee would not be willing to accept the alternative structure contemplated by the rights agreement if it was subject to these limitations, and to propose a 20-year term for the rights agreement.

On March 21, 2018, representatives of Goodwin sent a revised term sheet relating to the rights agreement to Simpson Thacher and Sullivan & Cromwell, which provided for an obligation by BAM to contribute additional BPY units or cash to maintain the collateral account, subject to a veto right by BAM over subsequent issuances of class A stock by GGP, and provided for a 20-year term of the rights agreement. The term sheet also provided that the rights agreement would be terminable upon the vote of a majority of the holders of class A stock unaffiliated with BAM. Also on March 21, 2018, representatives of Weil sent a revised draft of the merger agreement to Simpson Thacher and Sullivan & Cromwell, which did not reflect any material concessions on most open issues but proposed a cap on GGP’s expense reimbursement obligation of $75 million.

Later that day on March 21, 2018, Mr. Kingston called Mr. Hurwitz to discuss the remaining open issues. Messrs. Hurwitz and Kingston reached tentative agreement on a number of remaining issues subject to the

 

76


Table of Contents

special committee’s review and approval, including that GGP would be permitted to pay full quarterly dividends for the first two quarters of 2018; the rights agreement would have a 20-year term; for the first year following the closing, BAM would waive its management fee under its management services agreement to be entered into with BPR; there would be no representation by members of the GGP board on the board of BPY or BPR in light of the limited voting rights of the BPY units and class A stock; GGP’s reimbursement obligations would be subject to a cap to be agreed; the amount of the BPY reverse termination fee would remain at $1.2 billion; and the amount of the GGP termination fee would be decreased from $600 million to $400 million.

On March 22, 2018, representatives of Weil circulated a revised draft of the merger agreement to Simpson Thacher and Sullivan & Cromwell reflecting the proposed resolution of these issues. Over the course of the following days, representatives of the parties’ respective advisors continued to negotiate and finalize drafts of the various documents relating to the proposed transaction.

Also on March 22, 2018, the special committee held a telephonic meeting. Representatives of Goldman Sachs and Simpson Thacher were present at the meeting. Mr. Hurwitz provided the members of the special committee with an update of his discussion with Mr. Kingston and the proposed resolution with respect to certain remaining issues, and the members of the special committee agreed with the proposed resolutions. The special committee discussed the position of GGP management with respect to the proposed treatment of GGP options and GGP equity awards and determined, in light of the fact that the material issues had now been resolved, to instruct GGP management to negotiate directly with BPY with respect to the treatment of GGP options and GGP equity awards in the proposed transaction. The special committee instructed Goldman Sachs to prepare preliminary financial analyses for a meeting on the following day. Thereafter, the special committee met in executive session.

On March 23, 2018, the special committee met telephonically with representatives of Goldman Sachs and Simpson Thacher. At this meeting, representatives of Goldman Sachs made a presentation to the special committee with respect to:

 

    the terms of the final proposal;

 

    recent developments;

 

    the proposed terms of class A stock;

 

    certain financial projections prepared by GGP management on a standalone basis;

 

    certain financial projections prepared by BPY management of BPY on a standalone basis and BPY on a pro forma basis following the proposed transaction; and

 

    the financial analysis prepared by Goldman Sachs of the proposed transaction.

At the meeting, the special committee discussed these matters, as well as the process towards the finalization of proposed transaction agreements.

Later on March 23, 2018, representatives of Simpson Thacher sent a revised draft of the merger agreement to Weil, and representatives of Goodwin sent an initial draft of the rights agreement to Simpson Thacher and Sullivan & Cromwell. Over the course of the following days, representatives of the parties’ respective advisors continued to exchange drafts, negotiate and finalize the terms of these agreements and related documents.

On March 25, 2018, the special committee held two telephonic meetings, at which representatives of Goldman Sachs and Simpson Thacher, respectively, were present. At the first meeting, representatives of Simpson Thacher discussed with members of the special committee the status of the negotiation of definitive documentation. The special committee focused on the remaining open issues on the rights agreement, and in particular the provisions governing the ability to terminate or modify the rights agreement. BPY had proposed that the rights agreement should be subject to termination or amendment upon the consent of a majority of the

 

77


Table of Contents

holders of class A stock that are not affiliated with BAM. The special committee determined that a potential termination or amendment of the rights agreement should be subject to a higher consent threshold and require the consent of GGP’s independent directors as well, at least in the period immediately following the closing of the proposed transaction. Members of the special committee reiterated their desire to arrive at fully negotiated definitive agreements on satisfactory terms before determining whether to propose the potential transactions to the GGP board, and determined that the special committee was not willing to agree to the proposed resolution of the remaining open issues regarding the rights agreement.

Also on March 25, 2018, Messrs. Hurwitz, Mathrani and Kingston discussed the status of the documents and open issues as well as BPY’s agreement to the proposal by GGP management regarding the treatment of GGP options and GGP equity awards.

Over the course of the next two days, the parties’ advisors continued to negotiate and finalize the terms of the proposed transaction agreements.

In the late evening of March 25, 2018, the special committee met again telephonically with representatives of Goldman Sachs and Simpson Thacher. Representatives of Goldman Sachs and Simpson Thacher provided the special committee with an update on the status of the negotiations and Mr. Hurwitz informed the GGP board of his discussions with Messrs. Kingston and Mathrani, during which Messrs. Kingston and Mathrani had agreed on the treatment of GGP options and GGP equity awards in the proposed transaction.

In the morning of March 26, 2018, representatives of Weil sent a revised draft of the rights agreement to Simpson Thacher and Sullivan & Cromwell, which provided that the rights agreement could only be amended or terminated after the fifth anniversary of the closing of the proposed transaction, and then only with the consent of the independent directors of GGP and the majority of the holders of class A stock that are not affiliated with BAM. Over the course of the day, the parties’ respective representatives negotiated the terms of the rights agreement and agreed that an amendment or termination of the rights agreement prior to the second anniversary of the closing would require the consent of the independent directors of GGP and two-thirds of the holders of class A stock that are not affiliated with BAM, while an amendment or termination following such date would require either the consent of two-thirds of the holders of class A stock that are not affiliated with BAM, or the consent of the independent directors and the majority of the holders of class A stock that are not affiliated with BAM. Also on March 26, 2018, the parties’ advisors continued to negotiate and finalize all remaining transaction agreements and documents.

In the afternoon of March 26, 2018, the special committee held two telephonic meetings at which representatives of Goldman Sachs and Simpson Thacher were present. At the first meeting, representatives of Simpson Thacher reminded the members of the special committee of their fiduciary duties, summarized the material terms of the proposed transaction agreements and reviewed with the special committee the merger agreement, the bylaws amendments and the charter amendments, and discussed with the special committee the treatment of GGP options and GGP equity awards in the proposed transaction. Representatives of Goldman Sachs then:

 

    presented to the special committee Goldman Sachs’ financial analysis summarized under the section entitled “—Opinion of Goldman Sachs & Co. LLC” beginning on page [—] of this joint proxy statement/prospectus; and

 

   

rendered to the special committee the oral opinion of Goldman Sachs, subsequently confirmed by delivery of a written opinion dated March 26, 2018 to the special committee, to the effect that, as of March 26, 2018 and based on and subject to the factors and assumptions set forth in the written opinion, the aggregate amount of the pre-closing dividend in the form of cash and shares of class A stock (or, at the election of GGP common stockholders, BPY units) and merger consideration to be paid to the GGP common stockholders (other than BPY and its affiliates) pursuant to the merger agreement was fair from a financial point of view to such holders. The written opinion rendered by

 

78


Table of Contents
 

Goldman Sachs to the special committee is summarized under “—Opinion of Goldman Sachs & Co. LLC” beginning on page [—] of this joint proxy statement/prospectus.

At this meeting, the special committee discussed the matters above, the lack of interest that Goldman Sachs had received from parties interested in exploring an acquisition of, or other strategic transaction with, GGP during a period of more than five months since the public announcement of the November 11 proposal, as well as other factors described in greater detail below under the section entitled “Reasons for the Transactions and Recommendation of the Special Committee and the GGP Board”.

Later in the afternoon of March 26, 2018, the special committee met again telephonically with representatives of Goldman Sachs and Simpson Thacher. Representatives of Simpson Thacher reminded the members of the special committee of their fiduciary duties. The special committee discussed the proposed transaction and took into account a number of factors including:

 

    the fairness opinion orally referenced above delivered by Goldman Sachs to the special committee;

 

    the fact that during the period of more than five months since the public announcement of the November 11 proposal on November 13, 2017, and more than ten months since GGP’s announcement of a review of strategic opportunities and alternatives on May 1, 2017, no third party had come forward to make an alternative acquisition proposal with respect to GGP; and

 

    the other factors described in greater detail below under the section entitled “—Reasons for the Transactions and Recommendation of the Special Committee and the GGP Board”.

Upon further discussion, the special committee then unanimously determined that the merger agreement and the other Transaction Agreements and the Transactions, including the merger, the pre-closing dividend pursuant to the merger agreement and the charter amendments, were advisable, fair to and in the best interests of GGP and the unaffiliated GGP common stockholders, unanimously recommended that the GGP board approve, adopt and declare advisable, fair to and in the best interests of GGP and its stockholders, the merger agreement, the other Transaction Agreements and the Transactions, including the merger, the pre-closing dividend and the charter amendments, and unanimously resolved to recommend to the GGP board that the merger agreement be submitted by the GGP board for adoption by the GGP common stockholders and that the GGP board recommend that the GGP common stockholders vote in favor of the adoption of the merger agreement, that the charter amendments and the bylaws amendments be submitted by the GGP board for approval by the GGP common stockholders and that the GGP board recommend that the GGP common stockholders vote in favor of the approval of the charter amendments and the bylaws amendments.

Immediately following this meeting of the special committee, the audit committee of GGP held a telephonic meeting at which representatives of Sullivan & Cromwell and Simpson Thacher were present, and, in accordance with GGP’s Related Party Transactions Policy, effective May 15, 2014, unanimously resolved that the audit committee determined that the Transaction Agreements and the Transactions were on terms comparable to those that could be obtained in arm’s-length dealings with an unrelated party and approved the Transaction Agreements and the Transactions and recommended that the GGP board approve, adopt and declare advisable and in the best interests of GGP and its stockholders the Transaction Agreements and the Transactions.

Immediately following this meeting of the audit committee of the GGP board, the GGP board held a telephonic meeting. Representatives of Sullivan & Cromwell and Simpson Thacher were present at the meeting, and Messrs. Clark, Flatt and Kingston recused themselves from the meeting. At this meeting, upon recommendation of the special committee, following discussions and taking into account the factors described in greater detail below under the section entitled “ —Reasons for the Transactions and Recommendation of the Special Committee and the GGP Board”, the GGP board unanimously determined that the merger agreement and the other Transaction Agreements and the Transactions, including the merger, the pre-closing dividend pursuant to the merger agreement and the charter amendments, were advisable, fair to and in the best interests of GGP and

 

79


Table of Contents

the unaffiliated GGP stockholders, unanimously approved, adopted and declared advisable, fair to and in the best interests of GGP and its stockholders the merger agreement, the other Transaction Agreements and the Transactions, including the merger, the pre-closing dividend and the charter amendments, and unanimously resolved to submit the merger agreement for adoption by the GGP common stockholders and to recommend that the GGP common stockholders vote in favor of the adoption of the merger agreement, to submit the charter amendments and the bylaws amendments for approval by the GGP common stockholders and to recommend that the GGP common stockholders vote in favor of the approval of the charter amendments and the bylaws amendments.

Later in the evening on March 26, 2018, GGP and BPY executed the merger agreement and certain other Transaction Agreements and issued a press release announcing the Transactions.

Following the announcement of the execution of the merger agreement, lawsuits challenging the Transactions were filed in the Court of Chancery on behalf of putative classes of GGP common stockholders. On April 10, 2018, a purported GGP common stockholder filed an action captioned Susman v. GGP Inc., et al., and on April 11, 2018, a purported GGP common stockholder filed an action captioned Lowinger v. GGP Inc., et al. Both actions name as defendants GGP, BPY and the members of the GGP board. On April 19, 2018, the actions were consolidated under the caption In re GGP, Inc. Stockholder Litigation, and the complaint filed in the Susman action was designated the operative complaint in the consolidated action. The complaint alleges generally that the members of the GGP board and BPY breached their fiduciary duties by agreeing to the Transactions following an unfair process and at an unfair price. Both actions also allege that GGP and BPY aided and abetted the alleged breaches of fiduciary duties by members of the GGP board. The complaints seek, among other things, injunctive relief, attorney’s and expert fees and expenses, and, if the Transactions are completed, money damages. The defendants have not yet answered or otherwise responded in the complaint.

Reasons for the Transactions and Recommendation of the Special Committee and the GGP Board

As described above under the section entitled “Background of the Transactions”, the GGP board established the special committee and delegated to it the GGP board’s power and authority with respect to BPY’s proposal and any alternatives thereto, including, among other things, the power to solicit any expressions of interest or other proposals from BPY, to establish and direct the process and procedures related to any negotiation with BPY and any review and evaluation of BPY’s proposal or any alternative transactions with third parties, to make any related investigations, to retain legal and financial advisors, to evaluate the terms of any such proposal, to negotiate with BPY or other third parties and their respective representatives with respect to any proposal and the terms of any proposed definitive agreements relating to such proposals, and to report to the GGP board the special committee’s recommendations and conclusions with respect to any proposal, including a determination and recommendation as to whether such proposal or transaction would be fair to and in the best interests of the unaffiliated GGP common stockholders and should be approved by the GGP board, and the power to determine not to pursue BPY’s proposal or any alternative proposal or transaction.

With the assistance of its legal and financial advisors, the special committee evaluated the merger agreement and the other Transaction Agreements and, on March 26, 2018, the special committee unanimously (i) determined that the Transaction Agreements and the Transactions, including the merger, the pre-closing dividend and the charter amendments were fair to and in the best interests of GGP and unaffiliated GGP stockholders, (ii) recommended that the GGP board submit for adoption or approval by GGP common stockholders at the special meeting the merger proposal, the charter proposals and the bylaws proposals and (iii) recommended that the GGP board recommend to GGP common stockholders that they vote in favor of the adoption or approval of the merger proposal, the charter proposals, the bylaws proposals and the compensation proposal.

The special committee engaged its own legal and financial advisors and received advice throughout the negotiations from such advisors. Since the members of the special committee are independent of and not

 

80


Table of Contents

affiliated with BPY or any of its affiliates, the special committee believed that it could effectively represent the interests of the unaffiliated GGP stockholders in negotiating the terms of the Transactions.

The GGP board has adopted the special committee’s analyses and discussions as to the fairness of the Transactions to unaffiliated GGP common stockholders as described above as its own and, following the unanimous recommendation of the special committee, has (i) determined that the Transaction Agreements and the Transactions, including the merger, the pre-closing dividend, the charter amendments and the bylaws amendments are fair to and in the best interests of GGP and GGP common stockholders and (ii) approved, adopted and declared advisable and in the best interests of GGP and GGP common stockholders the merger agreement, the other Transaction Agreements and the Transactions, including the merger, the pre-closing dividend, the charter amendments and the bylaws amendments.

Accordingly, the GGP board, following the unanimous recommendation of the special committee, recommends that you vote “FOR” the merger proposal, “FOR” the charter proposals, “FOR” the bylaws proposals and “FOR” the compensation proposal.

When you consider the GGP board’s recommendation, you should be aware that certain GGP directors and executive officers have interests in the Transactions that are different from, or in addition to, their interests as GGP common stockholders. The special committee, comprised entirely of non-management independent directors, was aware of and considered these interests, among other matters, in evaluating the merger agreement and the Transactions. For more information about these interests, refer to the section entitled “Special Factors—Interests of GGP’s Directors and Executive Officers in the Transactions” beginning on page [—] of this joint proxy statement/prospectus. The GGP board, on behalf of GGP, believes that the Transactions, including the merger, are fair to GGP’s “unaffiliated security holders”, as defined under Rule 13e-3 under the Exchange Act.

In evaluating the Transaction Agreements and the Transactions, including the merger, the pre-closing dividend, the charter amendments and the bylaws amendments, and in the course of reaching the determinations and decisions, and making the recommendation, described above, the special committee consulted with its outside legal counsel and financial advisor and considered, among other things, the following factors and potential benefits of the Transactions (not necessarily in order of relative importance), each of which it believed supported its decision:

 

    the special committee’s belief that the total transaction consideration to unaffiliated GGP stockholders per share of GGP common stock, as further described under the section entitled “The Merger Agreement—Structure and Timing of the Transactions—The Pre-Closing Dividend” beginning on page [—] of this joint proxy statement/prospectus and reflecting an implied blended value of $21.79 based on the closing price of a BPY unit as at market close on March 23, 2018, was more favorable to such holders than the potential value that might result from other alternatives reasonably available to GGP, including the alternative of remaining a stand-alone public company and pursuing GGP’s current strategic plan, and other strategic or recapitalization strategies that might be undertaken as a stand-alone public company, in light of a number of factors, including the risks and uncertainty associated with those alternatives;

 

    the current and historical market prices of GGP common stock, including the market performance of GGP common stock relative to that of other participants in GGP’s industry and general market indices, and the fact that the implied blended value of the consideration of $21.79 per share of GGP common stock based on the closing price of a BPY unit as at market close on March 23, 2018 represents, the last completed trading day before the announcement of the Transactions:

 

    an implied premium of 14.6% to the closing share price for GGP common stock of $19.01 as of November 6, 2017, the last completed trading day before the first reported rumor of a potential acquisition of GGP by BPY, to be paid in connection with the Transactions;

 

    an implied premium of 3.0% to the closing share price for GGP common stock of $21.15 as of March 23, 2018, the last completed trading day before the announcement of the Transactions;

 

81


Table of Contents
    an implied premium of 15.7% to the lowest trading price for the shares of GGP common stock of $18.83 over the 52-week period ended November 6, 2017, the last completed trading day before the first reported rumor of a potential acquisition of GGP by BPY, to be paid in connection with the Transactions; and

 

    an implied premium of 4.0% to the volume weighted average price of $20.95 for the shares of GGP common stock over the three-month period ended November 6, 2017, the last completed trading day before the first reported rumor of a potential acquisition of GGP by BPY, to be paid in connection with the Transactions.

 

    information with respect to GGP’s business, operations, financial condition, strategy and prospects, and the risk in achieving such prospects, as well as industry conditions and trends, including the potential impact of increased capital expenditures and tenant allowances in a rising interest rate environment and GGP’s exposure to rising interest rates in light of GGP’s capital structure and financial leverage, and the special committee’s belief that the consideration to be paid in connection with the Transactions was fair in light of GGP’s business, operations, financial condition, strategy and prospects, as well as GGP’s historical and projected financial performance, taking into account the projections prepared by GGP management with respect to GGP’s prospects as a standalone company, including with respect to net operating income, EBITDA and funds from operations, which projections had been repeatedly adjusted downward over the course of the year 2017 and which reflected GGP management’s expectation that GGP’s results for 2018 would likely be significantly worse than its 2017 financial performance in a number of respects, as further described above in the section entitled “Background of the Transactions”;

 

    the special committee’s understanding of GGP’s business, assets, financial condition and results of operations, its competitive position and historical and projected financial performance, and the nature and challenges of the retail property industry;

 

    the fact that the GGP board had authorized a process to market for sale certain assets of GGP in July of 2017 at projected sales prices authorized by the GGP board on the basis of management’s view of the net asset value of such properties, which process concluded in January of 2018 with the receipt of proposals for the property that GGP management had taken to market that were substantially below the sales price initially authorized by the GGP board, and the special committee’s concern that the failure to market such property at the projected valuation put pressure on the net asset value of GGP’s portfolio more generally, which had been consistent with such projected valuation;

 

    that the transaction consideration allows GGP common stockholders to elect, subject to proration, to receive with respect to their shares of GGP common stock either (i) cash, subject to proration to reflect, among other things, the maximum amount of cash available to be distributed in the pre-closing dividend, the merger consideration, the partnership common unit cash amount, the partnership LTIP unit cash amount and the total GGP restricted stock cash consideration equal to $9,250,000,000 in the aggregate, as further described under “The Merger Agreement—Structure and Timing of the Transactions” beginning on page [—] of this joint proxy statement/prospectus, which provides such holders with immediate relative certainty of value at an attractive per share equity value without the market or execution risks associated with continued independence, or (ii) shares of class A stock or BPY units, which provide such holders with the opportunity to participate in any future value created as a result of the Transactions, by participating in potential further growth in the assets of BPR and BPY, future earnings growth of BPR and BPY, future appreciation in value of the shares of class A stock or BPY units, as applicable, and any future dividends after the merger, and the special committee’s expectation that, on average, as a result of the proration provisions in the merger agreement, GGP common stockholders would likely receive a blended consideration in connection with the Transactions comprising a combination of cash and shares of class A stock or BPY units;

 

   

the financial presentation of Goldman Sachs dated March 26, 2018 and the oral opinion of Goldman Sachs, subsequently confirmed by delivery of a written opinion dated March 26, 2018, rendered to the

 

82


Table of Contents
 

special committee, to the effect that, as of March 26, 2018 and based on and subject to the factors and assumptions set forth in the written opinion, the aggregate amount of the pre-closing dividend in the form of cash and shares of class A stock (or, at the election of GGP common stockholders, BPY units) and merger consideration to be paid to the GGP common stockholders (other than BPY and its affiliates) pursuant to the merger agreement was fair from a financial point of view to such holders, as further described under “—Opinion of Goldman Sachs & Co. LLC” beginning on page [—] of this joint proxy statement/prospectus;

 

    that all unaffiliated GGP common stockholders who are eligible to receive the pre-closing dividend will have the ability to elect to receive cash in the Transactions, which would provide them with immediate liquidity and a return on their investment and that all unaffiliated GGP common stockholders will receive a portion of cash in the Transactions in the form of the merger consideration;

 

    that the exchange ratio is fixed and will not be adjusted for fluctuations in the market price of GGP common stock or BPY units, and GGP common stockholders receiving BPY units in the Transactions will benefit from any increase in the trading price of BPY units between the announcement and the closing of the Transactions;

 

    that the consideration to be paid in connection with the Transactions allows GGP common stockholders to elect to receive class A stock, which are newly created securities issued by a U.S. public REIT, in lieu of BPY units, and the special committee’s belief that GGP common stockholders may have a preference to hold securities of a U.S. public REIT;

 

    that each share of class A stock is intended to provide an economic return equivalent to one BPY unit, and is exchangeable for one BPY unit or its cash equivalent (the form of payment to be determined by BPI in its sole discretion) as described in more detail in the section entitled “Description of Class A Stock” beginning on page [—] of this joint proxy statement/prospectus;

 

    the special committee’s expectation that following completion of the Transactions, current unaffiliated GGP common stockholders will own approximately 26% of the combined company (calculated based on all shares of class A stock having been exchanged for BPY units and pro forma for the proposed BAM preferred share conversion);

 

    that the terms of class A stock permit the holder thereof to request, at any time, to exchange shares of class A stock for an amount of cash equal to the value of the corresponding number of BPY units or, at the election of BPI in its sole discretion, a corresponding number of BPY units, in each case subject to adjustments to the applicable conversion factor, and that such exchange rights are further supported by BAM’s agreement to satisfy the obligation to deliver cash or BPY units, pursuant to and subject to the terms and conditions of the rights agreement, as further described in the section entitled “Other Transaction Agreements—The Rights Agreement” beginning on page [—] of this joint proxy statement/prospectus;

 

    that the consideration to be paid in connection with the Transactions and the other terms and conditions of the Transactions resulted from arm’s-length negotiations between BPY and the special committee;

 

    the special committee’s review of the merger agreement, the structure of the Transactions and the financial and other terms and conditions of the Transactions;

 

    BPY’s representation to the special committee that the consideration to be paid in connection with the Transactions was its best and final offer, and the conclusion reached by the special committee, after discussions with its legal and financial advisor and negotiations with BPY, that such consideration represented the highest per share consideration that could be obtained from BPY and that BPY likely would have withdrawn its offer if the special committee did not accept it;

 

    the fact that, during the period since BPY publicly announced its initial proposal to acquire GGP until the signing of the merger agreement, share prices for publicly traded mall REITs declined;

 

83


Table of Contents
    the likelihood that if the special committee had rejected BPY’s final proposal, the price of GGP common stock could, in the opinion of the special committee in part based on the financial projections presented by GGP management, have likely fallen below $19.01, its closing price on November 6, 2017, the last completed trading day before the first reported rumor of a potential acquisition of GGP by BPY;

 

    that the special committee, with the assistance of its financial and legal advisors, had considered alternatives including continuing to operate GGP on a standalone basis, a sale of selected assets, a spin-off of selected assets or a sale to an alternative buyer, and considered the risks and uncertainties associated with such alternatives, and the special committee’s belief that no other alternatives were reasonably likely to create greater certainty of value for GGP common stockholders than the Transactions, taking into account the risk of execution as well as business, competitive, industry and market risk;

 

    the fact that the process that GGP conducted in 2017 to explore potential strategic opportunities and alternatives, including a sale of GGP, did not result in any third party entering into a non-disclosure agreement or otherwise demonstrating to GGP or its advisors a willingness or ability to acquire all of GGP or a substantial portion of its assets;

 

    the fact that BPY had publicly announced its proposal to acquire GGP on November 13, 2017, which provided a significant amount of time for any third party wishing to engage in discussions with GGP to make its interest known, and the fact that, although the special committee had not granted BPY exclusivity and was free to consider indications from any other party, no potential acquiror other than BPY made a proposal to acquire GGP before the merger agreement was executed on March 26, 2018, more than five months after such public announcement, and the special committee’s belief that, if potential acquirors were interested in exploring a transaction with the GGP, such potential acquirors would have approached the special committee or its representatives after such public announcement;

 

    the efforts made by the special committee, with the assistance of its legal and financial advisors, to negotiate and execute transaction agreements as favorable to GGP and the unaffiliated GGP common stockholders as possible under the circumstances, and the fact that extensive negotiations regarding the Transaction Agreements were held between the special committee and its advisors and BPY and its advisors;

 

    the benefits that the special committee and its advisors were able to obtain during their extensive negotiations with BPY over the course of more than five months, including an increase in the total offer value and improved terms of the Transaction Agreements from the beginning of the process to the end of the negotiations, including the creation of class A stock as an alternative form of consideration in lieu of the BPY units to be paid in connection with the Transactions, and the establishment of the rights agreement to support the exchange rights of holders of class A stock;

 

    the business reputation and capabilities of BAM and BPY and their management, which the special committee believed could contribute positively to the future prospects of BPR;

 

    that BAM, which provides management services to BPY and will also provide services to BPR following closing of the Transactions, has agreed to waive, for one year, the management fees payable by BPR and the incremental management fees BPY would otherwise be required to pay in respect of the BPY units issued in exchange for shares of GGP common stock;

 

    the special committee’s view that other third parties would be unlikely to be deterred from making a superior proposal by the provisions of the merger agreement, including because GGP may, under certain circumstances and subject to the terms of the merger agreement, furnish information to or enter into discussions with such other third parties in connection with a competing proposal. In this regard, the special committee considered that:

 

   

the special committee (or the GGP board acting on the special committee’s recommendation) may make a GGP board recommendation change prior to the adoption of the merger agreement by the

 

84


Table of Contents
 

vote of the GGP common stockholders, subject to compliance with the merger agreement, if it determines in good faith (after consultation with its legal counsel and financial advisor) that, with respect to a superior proposal, the failure to take such action would be reasonably likely to be inconsistent with its fiduciary duties;

 

    the structure of the Transactions as a merger should allow sufficient time for a third party to make a superior proposal if it desires to do so; and

 

    while the merger agreement provides for a termination fee of up to $400 million that GGP would be required to pay to BPY if (i) BPY terminates the merger agreement in connection with a GGP board recommendation change, (ii) under specified circumstances, if GGP terminates the merger agreement in connection with a superior proposal or (iii) under specified circumstances, if GGP enters into a competing proposal within twelve months following a termination of the merger agreement, the special committee believed that this fee is reasonable in light of the circumstances and the overall terms of the merger agreement, consistent with fees in comparable transactions, and not preclusive of other offers. Refer to the section entitled “The Merger Agreement—Termination” beginning on page [—] of this joint proxy statement/prospectus.

 

    the absence of material regulatory approvals or material third-party consents required to consummate the Transactions and the likelihood of closing;

 

    the availability of appraisal rights under Delaware law to GGP common stockholders who do not vote in favor of the adoption of the merger agreement and who comply with all the required procedures under Delaware law, which provides those eligible GGP common stockholders with an opportunity to have the Court of Chancery determine the fair value of their shares of GGP common stock, which may be more than, less than, or the same as the consideration to be received in the Transactions (refer to the section entitled “Appraisal Rights in the Merger” beginning on page [—] of this joint proxy statement/prospectus);

 

    the other terms of the merger agreement, including the conditions to the closing of the Transactions, and the special committee’s belief that the closing of the Transactions is not subject to material regulatory approvals or material third-party consents likely to prevent the closing of the Transactions. In this regard, the special committee also viewed the termination provisions of the merger agreement to be limited and in furtherance of its objective to achieve as much certainty of closing as was reasonably possible, including:

 

    that the outside date under the merger agreement on which either party, subject to specified exceptions, can terminate the merger agreement, should provide sufficient time to consummate the Transactions;

 

    that the merger agreement does not contain a financing condition with respect to BPY’s financing and that BPY has received commitments for its financing, including that BPY has delivered an executed debt financing commitment letter to provide the debt portion of the financing from reputable commercial banks with significant experience in similar lending transactions and reputations for honoring the terms of their commitment letters, which increases the likelihood of such financing being completed; and

 

    that the merger agreement permits GGP to seek specific performance to prevent breaches of the merger agreement, to enforce specifically the terms of the merger agreement and to seek damages, including to seek specific performance remedies against BPY with respect to its obligation to use reasonable best efforts to consummate the Transactions.

 

    that the expense reimbursement of up to $20 million that would be payable by GGP to BPY if the merger agreement was terminated in certain specified circumstances was viewed by the special committee, after consultation with outside legal and financial advisors, to be reasonable;

 

   

the special committee’s belief, after its review and discussion of various factors, including the terms of the proposed financing for the Transactions (including fees and interest), and following consultation

 

85


Table of Contents
 

with its advisors, that it was likely that BPY would be able to obtain the necessary financing to pay the aggregate cash portion of the consideration, and that BPY’s combined business would be able to repay, service or refinance any indebtedness incurred in connection with the Transactions and, to the extent such indebtedness remains outstanding, to comply with the financial covenants applicable to such indebtedness, and the fact that the consummation is subject to the receipt by GGP of a solvency opinion;

 

    that the merger agreement is subject to the adoption by the affirmative vote of the holders of a majority of the outstanding shares of GGP common stock, and the affirmative vote of the holders of a majority of the outstanding shares of GGP common stock not owned by BPY or its affiliates;

 

    that the charter proposals and the bylaws proposals are each subject to approval by the affirmative vote of the holders of at least 66-2/3% of the outstanding shares of GGP common stock; and

 

    that the Brookfield voting parties agreed in the voting agreement to vote their shares of GGP common stock in favor of the Transactions.

In the course of reaching the determinations and decisions described above and making the recommendation described above, the special committee also considered a number of factors relating to the procedural safeguards that the special committee believes were and are present to ensure the fairness of the Transactions and to permit the special committee to effectively represent the interests of the unaffiliated GGP common stockholders, each of which safeguards the special committee believed supported its decision and provided assurance of the fairness of the Transactions to such holders. These procedural safeguards, which are not intended to be exhaustive and are not necessarily listed in any relative order of importance, are discussed below:

 

    that the special committee consists of five directors who are independent of, and not affiliated with, BPY or any of its affiliates, including BAM and its affiliates;

 

    that the special committee had exclusive authority to decide whether or not to proceed with a transaction or any alternative thereto, subject to the GGP board’s approval of the Transactions as required by Delaware law;

 

    that the special committee retained and was advised by its own legal and financial advisors;

 

    that the special committee was empowered to, among other things, solicit any expressions of interest or other proposals from BPY, establish and direct the process and procedures related to any negotiation with BPY and any review and evaluation of BPY’s proposal or any alternative transactions with third parties, make any related investigations, retain legal and financial advisors, evaluate the terms of any such proposal, negotiate with BPY or other third parties and their respective representatives with respect to any proposal and the terms of any proposed definitive agreements relating to such proposals, and report to the GGP board the special committee’s recommendations and conclusions with respect to any proposal, including a determination and recommendation as to whether such proposal or transaction would be fair to and in the best interests of the unaffiliated GGP common stockholders and should be approved by the GGP board, and to determine not to pursue BPY’s proposal or any alternative proposal or transaction, and no negotiation or substantive response regarding the Transactions in connection with BPY’s proposal following the establishment of the special committee was considered by the GGP board for approval until the special committee had recommended such action to the GGP board;

 

    that the special committee recognized that it had no obligation to recommend any transaction, including BPY’s offer, and that the special committee had the authority to “say no” to any proposals made by BPY or any other potential acquirors;

 

    that the special committee was involved in frequent and extensive deliberations over a period of more than five months regarding BPY’s proposal to acquire GGP, including over 30 meetings, and was provided with full access to GGP management and its advisors in connection with its due diligence;

 

86


Table of Contents
    that the members of the special committee were adequately compensated for their services consistent with market practice, and that their compensation was in no way contingent on their approval of the Transactions;

 

    that the merger agreement is subject to a “majority-of-the-minority” voting requirement, pursuant to which the consummation of the Transactions is subject to a condition that the merger agreement be adopted by the affirmative vote of holders of a majority of the outstanding shares of GGP common stock not beneficially owned by BPY or any of its affiliates (including BAM and its affiliates);

 

    that the merger agreement permits the special committee, under certain circumstances, to change, withhold, withdraw, qualify or modify its recommendation and permits GGP under certain circumstances to respond to inquiries regarding acquisition proposals and, upon payment of a $400 million termination fee to BPY, to terminate the merger agreement to accept a superior proposal (as such term is defined in the merger agreement), as described under the section entitled “The Merger Agreement—Covenants and Agreements—No Solicitation or Negotiation of Acquisition Proposals” beginning on page [—] of this joint proxy statement/prospectus; and

 

    that the special committee made its evaluation of the Transactions independent of BPY and its affiliates, including BAM and its affiliates, and with knowledge of the interests of BPY and its affiliates in the Transactions.

The special committee also considered and balanced against the potential benefits of the Transactions a number of uncertainties and risks concerning the Transactions, including the following (not necessarily in the order of relative importance):

 

    the participation in the Transactions by BPY and its affiliates, and the fact that their interests in the Transactions differ from the other GGP common stockholders;

 

    the current and historical market prices of GGP common stock, including the market performance of GGP common stock relative to that of other participants in the retail property industry and general market indices, and the fact that the implied blended value of the consideration to be paid in connection with the Transactions of $21.79 per share of GGP common stock based on the closing price of a BPY unit as at market close on March 23, 2018 represents, the last completed trading day before the date of the announcement of the Transactions:

 

    an implied discount of 19.6% to the highest trading price for the shares of GGP common stock of $27.10 over the 52-week period ended November 6, 2017, the last completed trading day before the first reported rumor of a potential acquisition of GGP by BPY;

 

    an implied discount of 5.8% to the volume weighted average price of $23.13 for the shares of GGP common stock over the 12-month period ended November 6, 2017, the last completed trading day before the first reported rumor of a potential acquisition of GGP by BPY;

 

    an implied discount of 15.8% to the volume weighted average price of $25.89 for the shares of GGP common stock over the three-year period ended November 6, 2017, the last completed trading day before the first reported rumor of a potential acquisition of GGP by BPY;

 

    an implied discount of 20.3% to BPY’s publicly disclosed estimate of the IFRS net asset value for GGP on a per share basis of $27.33 as of December 31, 2017;

 

    an implied discount of 15.6% to the estimated net asset value for GGP on a per share basis of $25.82, as published by Green Street Advisors as of March 23, 2018, the last completed trading day before the date of the announcement of the Transactions; and

 

    an implied discount of 16.2% to the estimated analyst consensus net asset value for GGP on a per share basis of $26.01, as published by SNL Financial Market as of March 23, 2018, the last completed trading day before the date of the announcement of the Transactions.

 

87


Table of Contents
    the current and historical market prices of BPY common units, including the fact that BPY’s share price of $19.14 as of March 23, 2018, the last completed trading day before the date of the announcement of the Transactions, represented a significant discount to the range of BPY’s publicly disclosed estimate of the IFRS net asset value of BPY per share over the past two years of $29.49 to $30.62;

 

    the potential impact of BPY’s existing ownership in GGP on other potential bidders;

 

    the absence of a “go-shop” provision in the merger agreement that would permit GGP to actively solicit a superior proposal for a period beginning after the execution of the merger agreement, and to terminate the merger agreement to enter into an agreement with respect to any such superior proposal for a reduced termination fee;

 

    the risk of GGP incurring substantial expenses related to the Transactions, including in connection with any litigation that may result;

 

    the risk of there being investor confusion as a result of offering to the unaffiliated GGP common stockholders the option to acquire two different types of publicly traded securities;

 

    the fact that the exchange ratio is fixed and will not be adjusted for fluctuations in the market price of GGP common stock or BPY units, and GGP common stockholders receiving BPY units in the Transactions will be adversely affected by any decrease in the trading price of BPY units between the announcement and the closing of the Transactions;

 

    the fact that BPY, following consummation of the Transactions, will obtain control, with respect to both equity ownership and voting power, of BPR, regardless of the elections of GGP common stockholders with respect to the form of the pre-closing dividend;

 

    the possibility that BPY and its affiliates could, at a later date, engage in unspecified transactions including a restructuring effort or the sale of some or all of the surviving corporation (i.e., BPR) or its assets to one or more purchasers that could conceivably produce a higher aggregate value than that available to stockholders in the Transactions;

 

    the fact that the class A stock and the BPY units to be obtained in respect of shares of GGP common stock in the Transactions will have limited voting rights;

 

    the 20-year term of the rights agreement and the possibility, subject to the terms thereof, that the rights agreement may at any time be amended or terminated pursuant to its terms;

 

    the execution risks associated with the implementation of the combined company’s long-term business plan and strategy and the challenges of combining the BPY and GGP businesses following the consummation of the Transactions, including technical, operational, accounting and other challenges, and the risk that the benefits of the Transactions may not be fully realized or may not be realized at all;

 

    the merger agreement’s restrictions on the conduct of GGP’s business prior to the completion of the Transactions, generally requiring GGP to conduct its business only in the ordinary course, subject to specific limitations, which may delay or prevent GGP from undertaking business opportunities that may arise pending completion of the Transactions;

 

    the merger agreement’s restrictions on GGP paying dividends prior to the completion of the Transactions, other than the payment of already declared dividends, up to one additional quarterly dividend, subject to proration, and the pre-closing dividend pursuant to the merger agreement;

 

    the risk that the announcement and pendency of the Transactions may cause substantial harm to GGP’s or BPY’s business or their respective relationships with employees or tenants or other business relationships and may divert management and employee attention away from the day-to-day operation of GGP’s business;

 

    the potential impact on the market price of BPY units as a result of the issuance of the consideration to be paid to GGP stockholders in connection with the Transactions;

 

88


Table of Contents
    the fact that the unaffiliated GGP common stockholders receiving BPY units in the Transactions will not have an opportunity to continue participating in GGP’s potential as a standalone company, but rather will participate in BPY’s potential upside;

 

    the fact that the unaffiliated GGP stockholders receiving class A stock in the Transactions will not have the opportunity to continue participating in GGP’s potential upside as a standalone company but rather will participate in BPY’s potential upside as a result of the fact that each share of class A stock is intended to provide an economic return equivalent to one BPY unit, and is exchangeable for one BPY unit or its cash equivalent (the form of payment to be determined by BPI in its sole discretion) as described in more detail under the section entitled “Description of Class A Stock” beginning on page [—] of this joint proxy statement/prospectus;

 

    the fact that the unaffiliated GGP common stockholders receiving cash in the Transactions will not have the opportunity to continue participating in GGP’s potential upside as a standalone company;

 

    that the receipt of cash and class A stock (whether or not such class A stock is converted at the closing into BPY units) in respect of shares of GGP common stock in the Transactions will be taxable to GGP common stockholders for U.S. federal income tax purposes. (For more information about these tax matters, refer to the section entitled “U.S. Federal Income Tax Considerations and Consequences—Material U.S. Federal Income Tax Considerations and Consequences of the Transactions” beginning on page [—] of this joint proxy statement/prospectus);

 

    that, under specified circumstances, GGP may be required to pay a termination fee and certain expenses in the event the merger agreement is terminated and the effect this could have on GGP, including:

 

    the possibility that the termination fee could discourage other potential parties from making a competing offer, although the special committee believed that the termination fee was reasonable in amount and would not unduly deter any other party that might be interested in making a competing proposal; and

 

    if the merger is not consummated, GGP may be required to pay its own expenses associated with the Transactions and in certain circumstances may be obligated to pay up to $20 million of BPY’s expenses in connection with the Transactions.

 

    the fact that there can be no assurance that all conditions to the parties’ obligations to complete the Transactions will be satisfied and that, as a result, it is possible that the Transactions may not be completed even if the merger agreement is adopted and the requisite stockholder approval is obtained;

 

    the risks and costs to GGP if the Transactions do not close, including the diversion of management and employee attention, potential employee attrition and the potential effect on business and tenant relationships;

 

    that certain GGP directors and executive officers have interests in the Transactions that are different from, or in addition to, their interests as GGP common stockholders. For more information about these interests, refer to the section entitled “Special Factors—Interests of GGP’s Directors and Executive Officers in the Transactions” beginning on page [—] of this joint proxy statement/prospectus;

 

    the other factors described under the section entitled “Risk Factors”; and

 

    risks of the type and nature described under the section titled “Cautionary Statement Concerning Forward-Looking Statements”.

In reaching its determination and making its recommendation, the special committee did not consider the liquidation value of GGP to be a relevant valuation method (i) because of the impracticability of determining a liquidation value given the significant execution risk involved in any breakup, (ii) a liquidation process would likely involve additional legal fees, costs of sale and other expenses that would reduce any amounts that

 

89


Table of Contents

shareholders might receive upon liquidation and (iii) because it considered GGP to be a viable going concern. Furthermore, the special committee did not consider net book value, which is an accounting concept, to be a useful indicator of GGP’s value because the special committee believed that net book value is primarily indicative of historical costs but is not a material indicator of the value of GGP as a going concern. In making its determination and approvals, and the related recommendations, the special committee considered the financial analyses regarding GGP prepared by Goldman Sachs and reviewed and discussed by representatives of Goldman Sachs with the special committee as an indication of the going concern value of GGP. The special committee did not expressly establish a specific going concern value for GGP to determine the fairness of the consideration to be paid to the unaffiliated GGP common stockholders in connection with the Transactions because the special committee did not believe there was a single method for determining going concern value. However, certain financial analyses presented to the special committee by representatives of Goldman Sachs, which included a present value of future share price analysis and a discounted cash flow analysis as described under “—Opinion of Goldman Sachs & Co. LLC” beginning on page [—] of this joint proxy statement/prospectus, were based on the operations of GGP as a continuing business and, to that extent, the special committee considered such analyses as going concern valuations. The special committee considered each of these analyses in the context of the fairness opinion rendered by Goldman Sachs, and the special committee expressly adopted these analyses and the opinion of Goldman Sachs, among the other factors it considered as described above, in making its determination and approvals. To the extent the pre-merger going concern value was reflected in the per share price of GGP common stock on November 6, 2017, the last completed trading day before the first reported rumor of a potential acquisition of GGP by BPY, the implied blended value of the transaction consideration based on the closing price of a BPY unit as at market close on March 23, 2018, represented a premium to the going concern value of GGP. In addition, the special committee considered the historical market prices of GGP common stock included in the financial analyses rendered by Goldman Sachs to the special committee as further described under the section entitled “—Opinion of Goldman Sachs & Co. LLC” beginning on page [—] of this joint proxy statement/prospectus.

Further, because neither GGP nor any of its affiliates has received in the last two years any offers concerning any merger or consolidation with respect to GGP, any sale or other transfer of all or substantially all of GGP’s assets or a purchase of GGP’s securities that would enable the holder to exercise control of GGP, from any party (other than the offer from BPY, which led to the merger agreement), the consideration of any alternative or recent firm offers was not a factor available for the special committee to consider. The special committee also did not view the prices paid by GGP for the open market repurchases of shares of GGP common stock in 2017 as relevant beyond indicating the trading price of GGP common stock during such periods. Because none of BPY or any of its affiliates purchased any shares of GGP common stock in the last two years except when in the fourth quarter of 2017, BPY exercised all of its outstanding warrants for shares of GGP common stock, there were no purchase prices in any such transactions available for the special committee to consider.

While the special committee considered potentially positive and potentially negative factors, the special committee concluded that, overall, the potentially positive factors outweighed the potentially negative factors. Accordingly, the special committee unanimously determined that the Transaction Agreements and the Transactions, including the merger, the pre-closing dividend and the charter amendments are fair to and in the best interests of GGP and unaffiliated GGP stockholders.

The foregoing discussion is not intended to be an exhaustive list of the information and factors considered by the special committee in its consideration of the Transactions, but includes the material positive factors and material negative factors considered by the special committee in that regard. In view of the number and variety of factors and the amount of information considered, the special committee did not find it practicable to, and did not make specific assessments of, quantify, or otherwise assign relative weights to, the specific factors considered in reaching its determination. In addition, individual members of the special committee may have given different weights to different factors. Based on the totality of the information presented, the special committee collectively reached the unanimous decision to recommended that the GGP board submit for adoption or approval by GGP

 

90


Table of Contents

common stockholders at the special meeting the merger proposal, the charter proposals and the bylaws proposals in light of the factors described above and other factors that the members of the special committee felt were appropriate.

Portions of this explanation of the special committee’s reasons for the recommendation of the Transactions and other information presented in this section are forward-looking in nature and, therefore, should be read in light of the section entitled “Cautionary Statement Concerning Forward-Looking Statements” beginning on page [—] of this joint proxy statement/prospectus.

Opinion of Goldman Sachs & Co. LLC

At a meeting of the special committee held on March 26, 2018, Goldman Sachs rendered to the special committee its oral opinion, subsequently confirmed in writing, to the effect that, as of March 26, 2018, and based upon and subject to the factors and assumptions set forth in Goldman Sachs’ written opinion, the aggregate consideration to be paid to GGP common stockholders (other than BPY and BPY’s affiliates) pursuant to the merger agreement was fair from a financial point of view to such holders.

The full text of the written opinion of Goldman Sachs, dated March 26, 2018, which sets forth the assumptions made, procedures followed, matters considered, qualifications and limitations on the review undertaken in connection with the opinion, is attached to this joint proxy statement/prospectus as Annex D. Goldman Sachs’ advisory services and opinion were provided for the information and assistance of the special committee in connection with its consideration of the proposed Transactions and the opinion does not constitute a recommendation as to how any GGP common stockholder should vote or make any election with respect to the proposed Transactions or any other matter.

In connection with rendering the opinion described above and performing its related financial analyses, Goldman Sachs reviewed, among other things:

 

    the merger agreement;

 

    annual reports to stockholders and Annual Reports on Form 10-K of GGP, and the annual reports to unitholders and Annual Reports on Form 20-F of BPY, for the five years ended December 31, 2017;

 

    certain interim reports to stockholders and unitholders of GGP and BPY, respectively, and certain Quarterly Reports on Form 10-Q of GGP;

 

    certain other communications from GGP and BPY to their respective stockholders and unitholders;

 

    certain publicly available research analyst reports for GGP and BPY;

 

    certain internal financial analyses and forecasts for GGP prepared by GGP management as approved for Goldman Sachs’ use by the special committee, which we refer to as the GGP forecasts and which are summarized below under “—Certain GGP Forecasts;” and

 

    certain internal financial analyses and forecasts for BPY on a stand-alone basis and for BPY on a pro forma basis giving effect to the proposed Transactions, in each case prepared by BPY management and as approved for Goldman Sachs’ use by the special committee, which we refer to as the BPY forecasts, including certain operating synergies projected by BPY management to result from the proposed Transactions as approved for Goldman Sachs’ use by the special committee, which we refer to as the synergies, and which are summarized below under “—Certain BPY Forecasts.”

Goldman Sachs also held discussions with members of the senior managements of GGP and BPY regarding their assessment of the strategic rationale for, and the potential benefits of, the proposed Transactions and the past and current business operations, financial condition and future prospects of BPY and with members of the senior management of GGP regarding their assessment of the past and current business operations, financial

 

91


Table of Contents

condition and future prospects of GGP; reviewed the reported price and trading activity for the shares of GGP common stock and the BPY units; compared certain financial and stock market information for GGP and BPY with similar information for certain other companies the securities of which are publicly traded; reviewed the financial terms of certain recent business combinations of REITs and in other industries; and performed such other studies and analyses, and considered such other factors, as Goldman Sachs deemed appropriate.

For purposes of rendering its opinion, Goldman Sachs, with the consent of the special committee, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by, Goldman Sachs, without assuming any responsibility for independent verification thereof. In that regard, Goldman Sachs assumed with the consent of the special committee that the GGP forecasts had been reasonably prepared on a basis reflecting the best then available estimates and judgments of, and the BPY forecasts, including the synergies, reflect the then best estimates and judgments of, and then available to, GGP management and GGP management believes that the BPY forecasts, including the synergies, were reasonably prepared by BPY management. Goldman Sachs also assumed with the consent of the special committee that each share of class A stock will be equivalent to one BPY unit in all respects meaningful to Goldman Sachs’ analysis. Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of GGP or BPY or any of their respective subsidiaries and Goldman Sachs has not been furnished with any such evaluation or appraisal. Goldman Sachs assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the proposed Transactions will be obtained without any adverse effect on GGP or BPY or on the expected benefits of the proposed Transactions in any way meaningful to Goldman Sachs’ analysis. Goldman Sachs assumed that the proposed Transactions will be consummated on the terms set forth in the merger agreement, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to Goldman Sachs’ analysis.

Goldman Sachs’ opinion did not address the underlying business decision of GGP to engage in the proposed Transactions, or the relative merits of the proposed Transactions as compared to any strategic alternatives that may have been available to GGP; nor did it address any legal, regulatory, tax or accounting matters. Goldman Sachs’ opinion addressed only the fairness from a financial point of view to the GGP common stockholders (other than BPY and BPY’s affiliates), as of March 26, 2018, the date of its opinion, of the aggregate consideration to be paid to such holders pursuant to the merger agreement. Goldman Sachs did not express any view on, and its opinion did not address, any other term or aspect of the merger agreement, the proposed Transactions or any term or aspect of any other agreement or instrument, including the class B exchange agreement, contemplated by the merger agreement or entered into or amended in connection with the proposed Transactions, including, the fairness of the proposed Transactions to, or any consideration received in connection therewith by, the holders of any other class of securities, creditors, or other constituencies of GGP; nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of GGP, or class of such persons, in connection with the proposed Transactions, whether relative to the aggregate consideration to be paid to the GGP common stockholders (other than BPY and BPY’s affiliates) pursuant to the merger agreement or otherwise. Goldman Sachs did not express any opinion as to the price at which the BPY units or the class A stock would trade at any time or as to the impact of the proposed Transactions on the solvency or viability of GGP or BPY or the ability of GGP or BPY to pay their respective obligations when they come due. Goldman Sachs’ opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Goldman Sachs as of, the date of its opinion and Goldman Sachs assumed no responsibility for updating, revising or reaffirming its opinion based on circumstances, developments or events occurring after the date of the opinion. Goldman Sachs’ advisory services and its opinion were provided for the information and assistance of the special committee in connection with its consideration of the proposed Transactions and the opinion does not constitute a recommendation as to how any holder of shares of GGP common stock should vote or make any election with respect to the proposed Transactions or any other matter. Goldman Sachs’ opinion was approved by a fairness committee of Goldman Sachs.

 

92


Table of Contents

Summary of Financial Analyses

The following is a summary of the material financial analyses delivered by Goldman Sachs to the special committee in connection with rendering the opinion described above. The following summary does not purport to be a complete description of the financial analyses performed by Goldman Sachs, nor does the order of analyses described represent relative importance or weight given to those analyses by Goldman Sachs. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of Goldman Sachs’ financial analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before March 23, 2018, the last completed trading day prior to the date of Goldman Sachs’ opinion, and is not necessarily indicative of current market conditions.

Implied Premia and Multiple Analyses

Goldman Sachs calculated that, on average, GGP common stockholders (other than BPY and BPY’s affiliates) would be paid $14.30 in cash and 0.3915 of either a share of class A stock or a BPY unit pursuant to the merger agreement, reflecting an implied blended value of $21.79, based on (i) the aggregate amount of cash payable to GGP common stockholders (other than BPY and BPY’s affiliates) in the form of the pre-closing dividend and/or merger consideration pursuant to the merger agreement, (ii) an implied value for the aggregate number of shares of class A stock (which the GGP common stockholders may elect to exchange in connection with the closing, on a one-for-one basis, into BPY units) to be paid to GGP common stockholders (other than BPY and BPY’s affiliates) in the form of the pre-closing dividend, derived based upon the closing price of $19.14 per BPY unit on March 23, 2018, the last completed trading day before the date of the announcement of the proposed Transactions, and (iii) the number of outstanding shares of GGP common stock and the outstanding GGP options, GGP restricted stock and other equity equivalent securities of GGP and GGPOP, as provided to Goldman Sachs by GGP management and used by Goldman Sachs with the approval of the special committee.

Goldman Sachs calculated the premia (or discount) represented by the implied blended value of $21.79 to be paid per share to the GGP common stockholders (other than BPY and BPY’s affiliates) pursuant to the merger agreement, as follows:

 

    an implied premium of 14.6% to the closing share price for GGP common stock of $19.01 as of November 6, 2017, the last completed trading day before the first reported rumor of a potential acquisition of GGP by BPY;

 

    an implied premium of 3.0% to the closing share price for GGP common stock of $21.15 as of March 23, 2018, the last completed trading day before the date of the announcement of the proposed Transactions;

 

    an implied discount of 19.6% to the highest intraday trading price for the shares of GGP common stock of $27.10 over the 52-week period ended November 6, 2017, the last completed trading day before the first reported rumor of a potential acquisition of GGP by BPY;

 

    an implied premium of 15.7% to the lowest intraday trading price for the shares of GGP common stock of $18.83 over the 52-week period ended November 6, 2017, the last completed trading day before the first reported rumor of a potential acquisition of GGP by BPY;

 

    an implied premium of 4.0% to the volume weighted average price of $20.95 for the shares of GGP common stock over the three (3) month period ended November 6, 2017, the last completed trading day before the first reported rumor of a potential acquisition of GGP by BPY;

 

    an implied discount of 5.8% to the volume weighted average price of $23.13 for the shares of GGP common stock over the 12-month period ended November 6, 2017, the last completed trading day before the first reported rumor of a potential acquisition of GGP by BPY;

 

93


Table of Contents
    an implied discount of 15.8% to the volume weighted average price of $25.89 for the shares of GGP common stock over the three (3) year period ended November 6, 2017, the last completed trading day before the first reported rumor of a potential acquisition of GGP by BPY;

 

    an implied discount of 20.3% to BPY’s publicly disclosed estimate of the IFRS net asset value for GGP on a per share basis of $27.33 as of December 31, 2017;

 

    an implied discount of 15.6% to the estimated net asset value for GGP on a per share basis of $25.82, as published by Green Street Advisors as of March 23, 2018, the last completed trading day before the date of the announcement of the proposed Transactions; and