Brookfield Asset Management is converting synthetically into a Bermuda LP

Brookfield Asset Management is transferring substantially all of its commercial real estate portfolio property to a Bermuda limited partnership (but presumably on a full or partial rollover basis as the GP starts out as an Alberta ULC before becoming a Bermuda company).  It will then transfer approximately a 10% interest in that partnership (the Property Partnership) to another Bermuda limited partnership (Brookfield Property Partners L.P., or "BPP LP"), with its approximate 89% non-voting LP interest in the Property Partnership being exchangeable (albeit on non-standard terms) into BPP LP units.

It will then distribute that 10% interest in BPP LP to its shareholders as a special dividend (none of that PUC distribution stuff), and will fund withholding tax applicable to non-resident registered shareholders by purchasing the units withheld by it (valued for these and other purposes based on the 5-day post-closing VWAP).  BPP LP and the Property Partnership are not expected to be subject to SIFT taxation based on their targeted non-Canadian residence.

Redeemable preferred shares (with structured voting rights) received by Brookfield Asset Management in an underlying Canadian corporation amount to only $1.25 billion, some of which will be redeemed in short order, so that there is no significant estate freezing-style structuring going on.

The objective may be for the assets of Brookfield Asset Management to now be largely exchangeable into an entity that trades somewhat as a flow-through entity.  Over time, the 90% interest of Brookfield Asset Management in the Property Partnership is expected to be diluted.

Neal Armstrong.  Summary of Circular for Brookfield Property Partners L.P. under Foreign Asset Funds and LPs (see also earlier June 2012 version).