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No Impact on Brookfield Asset Management Ratings from GGP Recapitalization Announcement

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  Published in Business and Finance on Monday, May 10th 2010 at 14:10 GMT by Market Wire
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NEW YORK--([ BUSINESS WIRE ])--General Growth Properties (NYSE: GGP) announced Friday that it received bankruptcy court approval for a $6.5 billion cornerstone investment led by Brookfield Asset Management (NYSE/TSX/Euronext: BAM), Fairholme Capital, and Pershing Square Capital which is expected to facilitate GGP's exit from bankruptcy. Under this agreement, Brookfield's share of the group's equity commitment is $2.625 billion, although Fitch anticipates that Brookfield will syndicate a significant portion of this commitment to other investors. Brookfield also holds a substantial amount of defaulted bank debt of GGP and this investment could be contributed to its share of the group's equity commitment. Further, the group has agreed to backstop a $1.5 billion debt offering to facilitate GGP's exit from bankruptcy and Brookfield's share of this backstop is approximately $600 million.

Fitch notes that Brookfield has adequate liquidity to fund its portion of the transaction and, as such, the proposed transaction has no immediate impact on the ratings or Outlook of Brookfield (IDR rated 'BBB', Stable Outlook).

Longer term, a successful closing of the proposed transaction would add a high quality portfolio of retail, office, and land development assets to Brookfield's assets under management and would further increase the volume and diversity of Brookfield's cash flow from investments.

Fitch also believes that the proposed transaction is a further illustration of Brookfield's opportunistic investment strategy, which reflects management's goal of adding premier real estate assets to its portfolio under management. It also reflects Brookfield's strategy of teaming up with additional investors to fund growth, which reduces capital commitments at the Brookfield level.

Additional information is available at [ www.fitchratings.com ].

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