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After initially rejecting a $14.8 billion cash-and-stock offer from Brookfield late last year, GGP's board agreed to a purchase price of $23.50 per share, or about $15.3 billion. GGP shares closed before the deal was announced Monday at $21.21 apiece.
It was broadly expected that GGP would only agree to sell at a much higher valuation. After filing for bankruptcy in 2009, the company came back with a much stronger portfolio of malls across the U.S. GGP is known for its Class A properties, some of the best in the country, lumped in with its peers including Simon Property Group and Macerich. The Chicago-based REIT has been at the forefront of redevelopments, signing deals with new tenants and experimenting with mixed uses.
"While we still see value in mall stocks, we think the GGP news is negative for the sector," J.P. Morgan analyst Michael Mueller said in a Tuesday note to clients.
As such, the firm has downgraded shares of GGP, Macerich and Simon to neutral from overweight ratings.
"Our instinct is that the GGP's board decision to accept the bid could have a bit of a ripple effect across the mall sector and make it harder for our bull-thesis [on mall REITs] to play out over the near-term," Mueller added.
Simon shares were recently falling about 3 percent in early trading Tuesday. Macerich's stock was down nearly 5 percent, while Taubman shares dropped 3 percent, and Seritage Growth Properties' stock was down more than 1 percent.
The lower-than-anticipated offer from Brookfield reflects just how much pressure mall owners feel today — even the best ones. The retail real estate industry has been scrambling to fill in the gaps as businesses like Sears Holdings, Toys R Us and Ann Taylor's parent company, Ascena Retail Group, shutter stores. Some vacancies have been easier to overcome than others, while Class A mall owners including GGP are known to have a greater demand for their better real estate from those retailers that are still growing.
"The terms of the agreement are below our target price [of $24 a share] and the average sell-side target, which suggests to us a reset lower for pricing of high-quality mall portfolios," RBC Capital Markets analyst Wes Golladay said.
Other analysts are calling for GGP shareholders to reject the offer, which is still subject to their approval and is expected to close in the third quarter of this year.
"GGP does not need to do any transaction as it has balance sheet strength and earnings growth to rideout the cyclical slowdown," Boenning & Scattergood analyst Floris van Dijkum wrote in a note to clients. He had said earlier this year that GGP should be valued at closer to $30 a share in a tie-up with Brookfield.
Jim Sullivan at BTIG is also recommending shareholders reject the new offer.
"GGP management has clearly stated on numerous occasions to shareholders that its assets are worth substantially more than where its shares are currently trading," he said in a note to clients. "We are surprised that the Special Committee has unanimously approved the new offer and recommends that the GGP shareholders approve the proposed terms."
GGP declined to comment. Representatives from Simon and Macerich didn't immediately respond to CNBC's request for comment.