Toronto-based Brookfield Asset Management Inc. (BAM) has purchased the majority of ownership stake in Verde Realty – a U.S. based privately-owned real estate investment trust (REIT). The company has shelled out $886 million to buy stake in Verde.
With the completion of this stake buyout, Brookfield will own and manage nearly 81% of common equity stake in Verde and the remaining 19% will be held by the some of the existing shareholders of the latter. The Verde stake will provide Brookfield with plethora of opportunities to expand its real estate business.
The abovementioned acquisition has placed Brookfield for a solid growth as an operator and distributor of industrial facilities in United States as well as Mexico. Verde owns nearly 111 industrial distribution facilities including 18 million square feet of space in the main U.S. distribution markets and gateway trade markets along the American and Mexican borders.
Further, Verde owns over 20,000 acres of land meant for future sales and developments. The collaboration with Brookfield will give Verde a new dimension and will aid in seeking consolidation opportunities in the highly competitive real estate industrial sector, thereby boosting its overall profitability.
We believe that the acquisition will prove very lucrative for Brookfield. Through this acquisition, the company will be able to expand its footprint internationally. Also, the merger would enhance the efficiencies of both the companies.
Brookfield competes with SL Green Realty Corp. (SLG) and Vornado Realty Trust (VNO), among others. Currently, Brookfield carries a Zacks #3 Rank, which translates into a short-term Hold rating.
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