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Simon buying General Growth debt for possible takeover

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Simon Property Group Inc. has been buying the unsecured debt of bankrupt rival General Growth Properties Inc. in preparation for a bid on the entire company, The Wall Street Journal reported Friday morning.

The newspaper, citing unnamed sources, said the Indianapolis-based shopping mall owner is facing competition for General Growth from Toronto-based Brookfield Asset Management Inc., which also has been buying up General Growth's debt.

Simon, the largest U.S. mall operator, hired a financial adviser and a law firm in mid-November to help it explore making a bid for some or all of the assets of General Growth, which filed for bankruptcy protection in April. General Growth is the second-largest U.S. mall operator, with more than 200 properties.

Many of General Growth's properties are well-positioned and healthy, but the firm had to file for Chapter 11 after it failed to refinance some of $27 billion in debt as it came due. The company already has renegotiated mortgages on more than 90 of its properties.

But General Growth's reorganization plan comes at one of the most challenging times in commercial real estate history. And while General Growth has been mired in bankruptcy, its rivals took advantage of thawing equity and debt markets to raise cash. REITs raised about $20 billion this year, after the capital markets virtually shut down in 2008.

Simon this year conserved cash by paying most of its dividend in stock. At the same time, it’s used its clout to launch a capital-raising spree, rolling out stock and debt offerings at a time many real estate companies are begging for money. The result: Simon now has $6 billion in “dry powder” it can use for acquisitions, according to a report by J.P. Morgan.

Now players like Simon hope to use the opportunity to pick up General Growth and shopping mall gems like Faneuil Hall in Boston and Fashion Show in Las Vegas on the cheap.

It wasn't clear how much of General Growth's debt Simon has purchased, the Journal reported. But Brookfield, which in 2007 bid on Mills Corp. before the chain went to Simon and a partner, has bought close to $1 billion of unsecured debt.

Simon executives have said malls owned by General Growth, which filed for bankruptcy protection in April, would be a good fit, according to Bloomberg.

“We’re a logical buyer,” Chairman and CEO David Simon said in a Sept. 15 interview on Bloomberg Television. “There’s a lot we could do with those properties.”

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  1. I think the poster was being sarcastic and only posting or making fun of what is usually posted on here about anything being built in BR or d'town for that matter.

  2. Great news IRL fans: TURBO the IMS sanctioned movie about slugs running the Indy 500 has caught the Securities and Exchange Commission because Dreamworks had to take a $132MILLION write down...because the movie was such a flop. See, the Indy/IMS magic soiled another pair of drawers. Bwahahahahahaha! How's CARTOWN doing? HAHAHAHA...Indy is for losers.

  3. So disappointed in WIBC. This is the last straw to lose a good local morning program. I used to be able to rely on WIBC to give me good local information, news, weather and traffic on my 45 minute commute.Two incidents when I needed local, accurate information regarding severe weather were the first signs I could not now rely on WIBC. I work weekend 12 hour nights for a downtown hospital. This past winter when we had the worst snowfall in my 50 years of life, I came home on a Sunday morning, went to sleep (because I was to go back in Sunday night for another 12 hour shift), and woke up around 1 p.m. to a house with no electricity. I keep an old battery powered radio around and turned on WIBC to see what was going on with the winter storm and the roads and the power outage. Sigh. Only policital stuff. Not even a break in to update on the winter storm warning. The second weather incident occurred when I was driving home during a severe thunderstorm a few months ago. I had already gotten a call from my husband that a tornado warning was just southwest of where I had been. I turned to WIBC to find out what direction the storm was headed so I could figure out a route home, only to find Rush on the air, and again, no breaking away from this stupidity to give me information. Thank God for my phone, which gave me the warning that I was driving in an area where a tornado was seen. Thanks for nothing WIBC. Good luck to you, Steve! We need more of you and not the politics of hatred that WIBC wants to shove at us. Good thing I have Satellite radio.

  4. I read the retail roundup article and tried Burritos and Beers tonight. I'm glad I did, for the food was great. Fresh authentic Mexican food. Great seasoning on the carne asada. A must try!!! Thanks for sharing.

  5. John, unfortunately CTRWD wants to put the tank(s) right next to a nature preserve and at the southern entrance to Carmel off of Keystone. Not exactly the kind of message you want to send to residents and visitors (come see our tanks as you enter our city and we build stuff in nature preserves...

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