Wednesday, November 18, 2009

Simon Getting Serious about GGP

Back in September I wrote this post about a possible move by Simon Property Group to acquire some or all of General Growth Property’s assets. Simon has now hired a financial advisor and a law firm to help them do just that.

According to this story in yesterdays ChicagoRealEstateDaily.Com, Simon has hired Lazard, Ltd and Wachtell, Lipton, Rosen & Katz to “help the company come up with a plan for a possible offer for all or some of General Growth Properties Inc.”

Of course this is still a long way from actually acquiring the company. Simon is the largest owner of malls in the US and GGP is the second largest so there will undoubtedly be anti trust concerns.

The same story also mentions that GGP is “near a deal with lenders to rework $11.5 billion in securitized mortgages,” which would put them in a good position to emerge from bankruptcy next summer intact.

None of this should really affect GGP’s plans for Town Center. If Simon does up end up acquiring GGP they would most likely proceed with the plans with the same development team in place now. The company doesn’t currently have the master plan communities’ expertise that GGP has.


Columbia Talk said...

I'd be interested in your thoughts. Why would a company with no expertise in planned communities want to keep that business? Isn't it possible Simon would try to spin it off?

Also, GGP has spent a lot of money and time on public engagement. How do we know new owners would show the same commitment?

I raise these questions because much of the debate on downtown Columbia revolves around GGP's plan and as you suggest in your post, GGP might not be around.

wordbones said...


Good question. I think it is a distinct possibility that Simon could spin off the master planned communities since it is outside of their core business. On the other hand, retail is gravitating away from the mall model towards more mixed use development. This would bode well for keeping the master planned communities together as a unit if they buy the company. It would add valuable expertise to their core business.

As far as commitment goes, anyone who ultimately owns the former Rouse Company holdings must follow through on the plans that GGP has proposed in order to realize a return on their investment. This die was cast when GGP paid a premium for the undeveloped land in Columbia in the purchase of The Rouse Company. Ironically, the sale of The Rouse Company and the premium it put on this land may have actually saved Town Center from piecemeal development.