General Growth Properties Inc. backed the latest financing proposal from a group led by Brookfield Asset Management Inc. in court Friday, rejecting Simon Property Group Inc.’s “best and final” offer.

The Brookfield-led plan is better than Simon’s, General Growth President Thomas Nolan said in testimony read in U.S. Bankruptcy Court in Manhattan Friday. Lawyers for Simon, the largest U.S. mall owner, said the company will withdraw from bidding if U.S. Bankruptcy Judge Allan Gropper approves the Brookfield plan, partly because the stock warrants that accompany it would make Simon’s buyout more expensive.

General Growth stock fell as much as 13 percent Friday in New York trading.

Under the revision introduced Friday, Brookfield’s investment partner Pershing Square Capital Management LP would forgo any warrants until General Growth’s reorganization is complete, and Toronto-based Brookfield would increase the strike price on its warrants to $10.75 from $10.50, General Growth lawyer Marcia Goldstein told Gropper. Another partner, Fairholme Capital Management LLC, also would get warrants.

The hearing comes a day after Indianapolis-based Simon stepped up its three-month quest to acquire General Growth by making a $6.5 billion bid for the Chicago-based company. Brookfield’s rival proposal would leave General Growth an independent company.

Simon’s offer is valued at $20 a share, the company said Thursday in a statement. It consists of $5 in cash, $10 in shares of Simon stock and the distribution of shares in a new company, General Growth Opportunities, valued at $5.

“These offers are best and final,” Simon CEO David Simon said in a letter to General Growth’s board. Simon “will not participate in the bidding process in the GGP bankruptcy proceeding in any way once GGP commits to issue the warrants associated with the latest Brookfield-sponsored plan.”

Pershing Square’s CEO William Ackman responded Friday with a letter to the General Growth board offering to forgo 17 million interim warrants. Ackman made the offer in an effort to push through Brookfield’s plan, saying Simon’s bid posed antitrust risks because it would link the nation’s two largest mall owners.

Simon estimates the warrants could cost General Growth shareholders $895 million. Ronen Bojmel, a managing director at General Growth’s financial adviser Miller Buckfire & Co., testified Friday that they would be worth about $688 million.

Simon’s original bid on Feb. 16 would have given General Growth stockholders $9 a share, including $6 in cash. That was turned down as too low. Both that plan and the new one pay all General Growth unsecured creditors, who hold about $7 billion in debt, in full.

General Growth filed the largest real estate bankruptcy in U.S. history in April 2009 after amassing $27 billion in debt making acquisitions. Its properties include New York’s South Street Seaport, Boston’s Faneuil Hall and the Grand Canal Shoppes and Fashion Show in Las Vegas.