GGP Said to Prefer Brookfield Proposal

General Growth Properties appears to have chosen a proposal from Brookfield Asset Management to help lead the shopping-center REIT out of bankruptcy.

May 3, 2010
By Allison Landa, News Editor

The Wall Street Journal is reporting that General Growth Properties has chosen a proposal from Brookfield Asset Management to help lead the shopping-center REIT out of bankruptcy. This would mean a spurning of would-be suitor Simon Property Group Inc., which has led an increasingly aggressive campaign to purchase GGP.

While the company has yet to make a formal announcement, the Journal said that the decision may not be the final move in what has been a protracted battle over the future of the nation’s second-biggest mall owner. It began in February, when Simon offered $10 billion for a buyout. In April, Brookfield and investors Pershing Square Capital Management LP and Fairholme Capital Management put forth a $6.5 billion offer to help GGP pay its debts.

On Wednesday, a hearing will be held to consider the process for securing an emergence transaction. That meeting has been twice rescheduled.

Simon has criticized GGP as being unwilling to consider the buyout proposal. On April 22, the firm made a revised proposal that would entail the acquisition of 250 million shares of common stock for $2.5 billion, in addition to fully backstopping the additional 380 million shares for $3.8 billion. A further $2.1 billion was pledged by investors Paulson & Co., Taconic Capital, ING Clarion Real Estate Securities, Oak Hill Advisors, and RREEF.

“Our amended proposal delivers significantly higher value and substantially greater certainty of closing to GGP and all of its stakeholders than the transaction proposed by Brookfield Asset Management,” Simon chairman and CEO David Simon wrote to GGP CEO Adam Metz in a publicly released letter.