IBJNews

Simon says new General Growth plan is less uncertain

Back to TopCommentsE-mailPrintBookmark and Share

A new plan by mall owner General Growth Properties Inc. to exit bankruptcy with funding from Brookfield Asset Management Inc. and two other creditors resolves some uncertainty rival bidder Simon Property Group Inc. has criticized, Simon CEO David Simon said.

“The first plan had a tremendous amount of uncertainty on how ultimately it would impact shareholders,” Simon said Thursday at a real estate conference in New York. “The second plan eliminates some of that uncertainty, but not all of it.”

General Growth’s biggest debt and equity holders are offering to invest $3.93 billion in the company, adding to $2.63 billion pledged by Toronto-based Brookfield as the mall owner restructures in bankruptcy. Bruce Berkowitz’s Fairholme Capital Management LLC and William Ackman’s Pershing Square Capital Management LP are offering the additional money.

Fairholme is Chicago-based General Growth’s biggest unsecured creditor and Pershing Square its largest equity investor, holding a 25-percent economic interest. Their investments would allow General Growth, the second-biggest U.S. mall owner, to pay unsecured creditors in full with cash.

Indianapolis-based Simon, General Growth’s largest rival with stakes in 382 properties across North America, Europe and Asia, offered more than $10 billion to buy its competitor out of bankruptcy, a proposal that has so far been rejected.

The offer by Brookfield, Fairholme and Pershing Square matches a provision in Simon’s bid to pay all unsecured creditors in cash. General Growth rejected Simon’s bid and lined up the Brookfield investment last month as part of a plan to split into two companies.

Simon Property and lawyers representing General Growth’s unsecured creditors had called the bankrupt mall owner’s previous proposal for restructuring its debt too risky because it relied on raising capital from public markets.

“Simon could pay much more than it originally offered and, perhaps, as much as a couple of dollars more per share than the value of the BAM/Fairholme/Pershing deal now on the table, and still get a good deal for Simon shareholders,” said Jim Sullivan, an analyst with Green Street Advisors in Newport Beach, Calif.

General Growth, owner of New York’s South Street Seaport and Boston’s Faneuil Hall, filed the largest real-estate bankruptcy in U.S. history in April after amassing $27 billion in debt making acquisitions.

Ackman, who spoke on a separate panel Thursday, said he invested in General Growth because “the mall business is one of most resilient asset classes in real estate.” Interest rates were low and it was unlikely that a judge would liquidate the company during the financial crisis, he said.

“If you think about a judge balancing the equity for all the various people here, this was a major restructuring that required no taxpayer investment,” he said. “Ultimately everyone wins.”

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. Hello Dear Are you tired of Seeking Loans and Mortgages,have you Been Turned down constantly By your banks and Other Financial Institutions or Micro Finance scheme. This is let you know with 100% guarantee that we Offer loans ranging from $1,000 Minimum to $1,000,000.00 Maximum at 3% interest rate per Month. We give out LOANS for developing business. a competitive edge/business expansion. email address: michealscottloan124@gmail.com We offer the following kinds of loans and many more; * Personal Loans ( Unsecured Loan) * Business Loans ( Unsecured Loan) * Consolidation Loan * Combination Loan * Home Improvement * Xmas Loans for contact to seek for loan email this email address: michealscottloan124@gmail.com Thanks

  2. My name is Mr Henry Josh and i live in the USA California and life is worth living right now for me and my family and all this is because of one man sent by GOD to help me and my family, i once had a life filled with sorrow because my first SON needed a kidney transplant and all our savings were going towards his medications and this normally leaves us with no money to pay our bills or even put enough food on our table and our rent was due and no funds to pay these bills and life felt so unfair to me and every night my wife will cry herself to sleep every night until one day, i was browsing through yahoo answers and i saw a striking advert of a man that gives out personal loans and that the offer is opened to all and i have heard so many things about internet scams but at this point of my life, i was very desperate and ready to take any risk and at the end of the day, i applied for this loan and from one step to another, i got my loan within 12 hours through bank transfer and you know, it was all like a dream and i called Mr Daniel Jones A Man who is the GOD sent lender i found and said, i have received my loan and he smiled stating that to GOD be the glory and i was so shocked as i have never ever seen anyone with such a GOD fearing and kind heart and today, i am the happiest man on earth because by GOD’S grace, my SON kidney transplant was successful and today he is healthy, i and my family are living very comfortable and happy and if you are in my former situation or in serious and legitimate need of a loan, you can reach this GOD sent lender via fidelityloanfirm@outlook.com

  3. Greetings to everyone reading this comment!!! I am Greg William by name. I am out here to recommend the effort of Mark Oscar,I was in need of a consolidation loan amount of 50,000 and as soon as I got in contact with Mark Oscar Loan Firm on Wednesday last week and on Friday last week as well I receive an alert from my bank(Royal Bank of Scotland Group) that the fund was transferred,I want everybody on this site to contact Mark Oscar now via email on how to get a loan because I got my loan from them and I am very happy,so contact them now. Oscarloanfinance@hotmail.com Thanks!!!!!!

  4. Elected officials, like Mourdock, get vested in 8 years. It takes 10 years for all other public employees, most of whom make a lot less money. So much for the promise to finish out his term.

  5. Great state treasurer and a good man!! Just curious if the folks who didn't quite understand his quote would like to tell my daughter-in-law that God didn't intend her! Mourdock's comment was correct but twisted and the article didn't mention that his opponent and the press let the impression stand that Mourdock meant that the rape was intended. Stupid people!!

ADVERTISEMENT