Simon Ups the Ante For GGP

The word from Indianapolis on Wednesday was the Simon Property Group has rounded up another billion-plus dollars to sweeten its bid for bankrupt General Growth Properties and its succulent portfolio of 200 or so regional U.S. malls.

April 22, 2010
By Dees Stribling, Contributing Editor

The word from Indianapolis on Wednesday was the Simon Property Group has rounded up another billion-plus dollars to sweeten its bid for bankrupt General Growth Properties and its succulent portfolio of 200 or so regional U.S. malls. The new capital commitment comes from the likes of ING Clarion Real Estate Securities, Oak Hill Advisors, RREEF and Taconic Capital Advisors, according to Simon.

In making a statement about the upped bid, Simon chairman and CEO David Simon dissed the other offer on the table at the moment. “[The] dilutive warrants required by Brookfield… could cost GGP shareholders $895 million [and] are unnecessary and unfair to GGP’s current shareholders,” he asserted.

The new offer by Simon would be at the same per-share price as the current Brookfield, Pershing Square and Fairholme Capital offer. But it would not, Simon stressed, include those pesky equity warrants. He added that the sweetened Simon plan would recapitalize GGP with a “less concentrated ownership among a diverse group of investors,” in case anyone was worried that the Justice Department might actually look into the antitrust implications of the deal (and it might, these days).

Homebuilders in Land Rush

The Wall Street Journal has reported, based on data provided by housing research firm Zelman & Associates, that there’s a land rush on among homebuilders. The evidence is in a upward spike in prices for finished lots–the sort of land that homebuilders want to be land-banking, waiting for the next time there’s demand for homes.

According to Zelman, prices nationwide for such land are up about 20 percent from early 2009, a period that is now being characterized as a trough for the market. In some highly desirable locations, land prices are nearly double what they were about a year ago.

One such eager buyer is homebuilder Standard Pacific Corp., whose CEO Ken Campbell said during a conference call on Monday that “our strategy is to overbuy in this 24-month window.” After that, he figures that prices for land will be high again, putting early buyers such as Standard Pacific in the catbird seat.

Financial Reform Inches Forward

Sen. Charles Grassley (R.-Iowa) voted in the Senate Agriculture Committee on Wednesday to overhaul regulation of the market for derivatives, the opaque financial instruments that helped push financial markets toward the abyss in the fall of 2008. The vote was significant in that it signaled that there might be some Republican support for financial regulation overhaul after all.

That’s only the latest in a blizzard of developments regarding the overhaul of the financial sector, which as recently as March seemed like a “lost opportunity” (or a “dodged bullet,” depending on whom was asked). President Obama pressed the case for the overhaul of derivatives during a speech in New York on Thursday, as well as an agency to protect consumers in the financial marketplace and a $50 billion fund, paid for by the financial industry, to dismantle firms that are “too big to fail” when, in fact, they are about to fail.

Wall Street had a near-break-even day on Wednesday, with the Dow Jones Industrial Average ending up 7.86 points, or a scant 0.07 percent, while the Nasdaq gained 0.17 percent. The S&P 500 lost 0.1 percent.