IBJNews

General Growth says it will consider acquisition offers

Back to TopCommentsE-mailPrintBookmark and Share

General Growth Properties, the Chicago shopping mall owner that Indianapolis-based Simon Property Group Inc. is interested in buying, said the company is considering all acquisition offers and may sell shares to the public to raise capital.
  
General Growth, the nation’s second-largest mall owner, is seeking to emerge from bankruptcy after amassing $27 billion in debt during an acquisition spree.

Its board and management are evaluating options to reduce debt and also are “considering all indications of interest in the company,” General Growth said Thursday in a statement.

On Tuesday, the company said a bankruptcy court approved its plan to restructure $10.25 billion in debt. It also is considering a plan to restructure another $3 billion of additional secured debt.

Simon, the nation’s No. 1 mall owner, and Brookfield Asset Management, a Canadian company that owns real estate worldwide, have emerged as potential suitors of General Growth.

“They’re going to have their opportunity to step forward,” Thomas Nolan, president and chief operating officer,” told Bloomberg News. “From our standpoint, we acknowledge that. We are looking at as many options as we can, because our ultimate endgame is to maximize our enterprise value for our stakeholders.”

Nolan said that both Simon and Brookfield have bought some of General Growth's unsecured debt.

“We don’t have confirmation of how much they own,” Nolan told Bloomberg News. “But we certainly understand that that’s occurred.”

Rich Moore, managing director with RBC Capital Markets in Solon, Ohio, told Bloomberg that General Growth may have issued the statement to pump up its value.

“There’s a recognition by management that they need to tell people what we should already all know -- that these guys are out there,” he said.  “I wouldn’t put it past them to ignite a little bit a bidding war.”

General Growth filed the biggest real-estate bankruptcy in U.S. history in April. Founded in 1986, it has 200 malls in 45 states, and had 2008 revenue of $3.4 billion.

“It’s very clear that these assets would perform better in pretty much anyone’s hands,” David M. Fick, a Stifel, Nicolaus & Co. managing director, told Bloomberg. “We think the most natural buyer is Simon.”

Simon has 320 malls in 41 states, plus properties in South America, Europe and Asia. It had 2008 revenue of $3.8 billion.

Simon has positioned itself to make acquisitions by conserving cash and by paying most of its dividend in stock. On Dec. 8, it agreed to purchase Baltimore-based Prime Outlets Acquisition Co. for $2.3 billion including the assumption of debt. Prime Outlets owns 22 properties.

Stephen Sterrett, Simon Property’s chief financial officer, said on Dec. 8 that the Prime Outlets purchase “doesn’t alter our thinking about General Growth” and that Simon was “still evaluating the situation.”

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. How much you wanna bet, that 70% of the jobs created there (after construction) are minimum wage? And Harvey is correct, the vast majority of residents in this project will drive to their jobs, and to think otherwise, is like Harvey says, a pipe dream. Someone working at a restaurant or retail store will not be able to afford living there. What ever happened to people who wanted to build buildings, paying for it themselves? Not a fan of these tax deals.

  2. Uh, no GeorgeP. The project is supposed to bring on 1,000 jobs and those people along with the people that will be living in the new residential will be driving to their jobs. The walkable stuff is a pipe dream. Besides, walkable is defined as having all daily necessities within 1/2 mile. That's not the case here. Never will be.

  3. Brad is on to something there. The merger of the Formula E and IndyCar Series would give IndyCar access to International markets and Formula E access the Indianapolis 500, not to mention some other events in the USA. Maybe after 2016 but before the new Dallara is rolled out for 2018. This give IndyCar two more seasons to run the DW12 and Formula E to get charged up, pun intended. Then shock the racing world, pun intended, but making the 101st Indianapolis 500 a stellar, groundbreaking event: The first all-electric Indy 500, and use that platform to promote the future of the sport.

  4. No, HarveyF, the exact opposite. Greater density and closeness to retail and everyday necessities reduces traffic. When one has to drive miles for necessities, all those cars are on the roads for many miles. When reasonable density is built, low rise in this case, in the middle of a thriving retail area, one has to drive far less, actually reducing the number of cars on the road.

  5. The Indy Star announced today the appointment of a new Beverage Reporter! So instead of insightful reports on Indy pro sports and Indiana college teams, you now get to read stories about the 432nd new brewery open or some obscure Hoosier winery winning a county fair blue ribbon. Yep, that's the coverage we Star readers crave. Not.

ADVERTISEMENT