CHICAGO -- Brookfield Properties Corp. said yesterday it will pay $4.8 billion to acquire Trizec Properties and its Canadian arm in a commercial real estate deal that creates one of North America's largest landlords.
Investment firm Blackstone Group joined Brookfield in the purchase, which is expected to close in the third or fourth quarter. In addition, Brookfield will assume $4.1 billion in Trizec debt.
The deal came with the U S office market strengthening even as residential real estate loses some of its sizzle.
Brookfield, based in Toronto, has 67 office buildings totaling 48 million square feet in downtown New York City, Boston, and Washington, D.C., as well as cities in Canada. Chicago-based Trizec is nearly as large, with 61 office properties totaling 40 million square feet in seven U S markets.
Under the agreement, Brookfield will buy all outstanding shares of Trizec not owned by Trizec Canada for $29.01 per share in cash, an 18 percent premium over the stock's Friday closing price.
Brookfield will acquire all outstanding voting shares and multiple voting shares of Trizec Canada for $30.97 in cash, a 30 percent premium over the closing price of Trizec Canada's subordinate voting shares price on Friday.
Trizec Canada shareholders may be given the option to receive part of the payment in preferred shares of Brookfield properties.
The boards of Trizec, which was founded by Canadian multimillionaire Peter Munk, chairman of the world's largest gold producer in Barrick Gold Corp., and Trizec's Canadian arm each approved the agreement.
The purchase will give Brookfield a bigger property portfolio in Manhattan, where its holdings already include the World Financial Center. Trizec's top buildings include the Grace Building and One New York Plaza in Manhattan, the Victor Building and 1200 K Street NW in Washington, D.C., and Bank of America Plaza and Figueroa at Wilshire in Los Angeles.