Brookfield Properties Corp. said Monday that it will buy Trizec Properties Inc. and its Canadian investment arm in a $4.8 billion deal that pairs two of the largest commercial real estate companies in North America.
The Toronto-based Brookfield currently owns 67 office buildings across New York, Washington D.C., Boston and Canada totaling 48 million square feet, while Chicago-based Trizec owns 61 office buildings totaling over 40 million square feet across the United States.
The Blackstone Group Inc. joined Brookfield in the acquisition, which is expected to close in the third or fourth quarter. Among the properties included in the deal are Brookfield's World Financial Center in Manhattan and Trizec's Bank of America Plaza in Los Angeles.
Brookfield will buy all outstanding voting shares of Trizec, not owned by Trizec Canada Inc. for $29.01 per share in cash and Trizec Canada shares for $30.97. The figures represent an 18 percent and 30 percent premium respectively above the closing prices of the shares this past Friday.
Trizec Canada is a mutual fund which holds a 38 percent stake in Trizec Properties and allows Canadian investors to indirectly invest in the U.S. company.
Trizec Canada shareholders may be given the option to receive part of the payment in preferred shares of Brookfield properties.
Holders of common units of Trizec Holdings Operating LLC., a Trizec subsidiary, will receive $29.01 per share in cash or can receive a common or preferred unit in the surviving limited liability company subsidiary.
Tim Callahan, chief executive of Trizec Properties explained in a statement that while the firm had done well, markets had undervalued its worth.
In recognizing the underlying value of the company's office portfolio, Callahan said, and especially its operating platform, the transaction announced today accomplishes Trizec's ultimate objective as a public company, which is to maximize stockholder value.
Trizec's top buildings also include the Grace Building in Manhattan and the Victor Building in Washington.
Shares of Trizec Properties closed near their 52-week high on Tuesday at $28.68 while Brookfield holdings closed at $30.89, $0.28 lower than their opening price.