DBRS Comments on Brookfield Property Partners’ Announcement to Privatize BPO

DBRS notes that today Brookfield Property Partners L.P. (BPP: not rated by DBRS) announced its proposal to acquire Brookfield Office Properties Inc. (BPO or the Company) through a tender offer for “any or all” of the common shares of BPO that it does not currently own (the Offer) for a consideration value of $19.34 per common share of BPO.

BPP currently has a controlling interest in BPO through its 51% ownership. Any change in the level of ownership in and of itself would not change the credit risk profile of BPO as DBRS expects the Offer will not result in any material changes in BPO’s business operations or financial policy.

In addition, DBRS notes that BPP intends to keep all of the corporate debt and preferred shares of BPO outstanding regardless of its ownership level in BPO. BPO currently has $330 million of senior unsecured notes and $2.2 billion of preferred shares outstanding.

However, if BPP acquires 100% of the common shares of BPO, BPP may consider making an offer to the holders of BPO's outstanding Class AAA, Series G, H, J and K preferred shares that are convertible into common shares to exchange their shares for equivalent shares of another subsidiary of BPP which would be exchangeable for units of BPP under certain conditions.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodology is Rating Real Estate Entities, which can be found on our website under Methodologies.