GGP Says No Thanks, Simon (For Now)

General Growth Properties hit the ball back to Simon Property Group's side of the court on Tuesday by calling Simon's $10 billion takeover bid a trifle low. GGP then invited other interested parties to make their own bids, and even offered to provide financial projections and data on its shopping malls to potential suitors.

February 17, 2010
By Dees Stribling, Contributing Editor

Courtesy Flickr Creative Commons user LancerE

General Growth Properties hit the ball back to Simon Property Group’s side of the court on Tuesday by calling Simon’s $10 billion takeover bid a trifle low. GGP then invited other interested parties to make their own bids, and even offered to provide financial projections and data on its shopping malls to potential suitors.

“We believe the information we would provide to you as part of this process will enable you to better understand the company, get to a higher valuation, and provide a fully documented offer,” General Growth Chief Executive Officer Adam Metz said today in a not-private letter to Simon chairman and CEO David Simon.

The bankrupt GGP’s unsecured creditors are reportedly all aboard with a Simon takeover, which would pay them off fully. GGP shareholders, on the other hand, don’t seem quite so hep on the deal. The bankruptcy court would have to sign off on any deal as well. But if it happens, the combination would make Simon the landlord of roughly one-third of all the mall properties in the United States.

Mortgage Delinquencies Still Rising: TransUnion Report

Mortgage loan delinquency–the percentage of borrowers 60 or more days past due–has increased for the 12th straight quarter, according to a report released Tuesday by Chicago-based TransUnion. As of the fourth quarter of 2009, the national average was at an all-time high of 6.89 percent, compared with 4.58 percent in 4Q08.

Geographically speaking, the usual suspects continued to see the highest rates of borrower delinquency rates in 4Q09: Nevada with 16.19 percent and Florida with 14.93 percent. The lowest mortgage delinquency rates were found in North Dakota (1.84 percent), South Dakota (2.46 percent) and Alaska (2.84 percent). Places showing the greatest percentage growth in delinquency from 3Q09 were the District of Columbia (+20.2 percent), Louisiana (+17.7 percent) and Delaware (+14.8 percent).

Drill a little deeper and there are some relative bright spots, however. Thirty-eight MSAs showed a decrease in their mortgage loan delinquency rates since the third quarter of 2009. Leading the pack for improving credit conditions were Corvallis, Ore.; Lafayette, Ind.; and Sharon, Pa.

Whole Foods Pricing Strategy Seems to Pay Off

Last year, Whole Foods Market Inc. found religion when it comes to competitive pricing, and it seems to be paying off for the retailer that used to be associated with premium prices for the sake of premium prices. Net income was $49.7 million, or 32 cents per share, for the company’s fiscal first quarter ended January 17, compared with net income of $27.8 million, or 20 cents per share, during the same quarter a year ago. Same-store sales were up 2.5 percent over the same period.

“Early last year, we made the shift from being fairly reactionary on pricing to being much more strategic,” said John Mackey, CEO of Austin-based Whole Foods during its conference call on Tuesday. “We have seen this strategy successfully play out over the last several quarters, as we have produced strong year-over-year improvement in gross margin and comps.”

Mackey also chalked up some of the company’s improvement to a relatively new real estate strategy of building smaller stores–about 9 percent smaller than older stores, averaging 47,000 square feet. “These smaller new stores produced 27 percent higher average weekly sales per store of $650,000, or a 37 percent increase in sales per square foot to approximately $707,” noted Mackey.

Wall Street roared back from the Presidents Day weekend, with the Dow Jones Industrial Average gaining 169.67 points, or 1.68 percent. The S&P 500 rose 1.8 percent and the Nasdaq advanced 1.4 percent.