Commercial Real Estate and Bankruptcy and Mergers & Acquisitions and Public Companies and Simon Property Group and Real Estate & Retail

Simon, rival seek foreign investors to back General Growth bid

March 15, 2010

Indianapolis-based Simon Property Group and its chief rival in the battle to acquire bankrupt shopping mall operator General Growth Properties Inc. are seeking funding from sovereign wealth funds in the Middle East and Asia, according to the Financial Times of London.

Citing sources familiar with the negotiations, the publication said both Simon and rival bidder Brookfield Asset Management Inc. are engaged in preliminary talks with overseas investors.

“Several of the larger sovereign funds are working with both parties,” Guy Metcalfe, head of real estate investment banking for Morgan Stanley, told the Times.

Sovereign wealth funds are state-owned investment funds composed of a variety of assets including stocks, bonds and property.

Simon, the nation’s largest shopping mall owner, in February ended months of speculation that it had its sights set on Chicago-based General Growth, offering $10 billion for its closest competitor. General Growth’s portfolio includes 200 high-end mall properties.

But General Growth rejected the bid, announcing plans to exit bankruptcy with funding from Brookfield and two other creditors.

The Times said Simon has been talking to sovereign wealth funds such as the Qatar Investment Authority, and sources told the publication that Brookfield is likely to raise money from foreign investors that already have backed its $5.5 billion distressed real estate opportunity fund.

Metcalfe told the Times that the possible involvement of overseas investors is reflected the “size of the deal and quality of the assets.”

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