Two quick GGP pieces this morning. The first talks about the reorg plan with Brookfield, which stands to make a killing if things go well. Predictably, Simon says: ""General Growth's proposed recapitalization amounts to a risky equity play on the backs of its unsecured creditors." The story also notes that Westfield has also signed an NDA with GGP, meaning it has access to due diligence materials. So now we have the possibility of yet another bid, or a combination of bids.We can caption the other as Bucksbaum speaks. He blames the BK on the economy and not the Rouse acquisition. And while...
A good GGP and a bad GGP
That appears to be the company's reorganization plan: Split the company in two, with a "good company" holding most of the malls and with respectable returns, and a "bad" company, which has much more risk but presumably also more potential for reward. You could also set the bad company for a separate sale, perhaps to someone to has a higher risk tolerance but sees potential in those deals, such as 20-30 malls (including some Simon may want???), raw land, the residential arm and the low-slung Wacker Drive HQ of the company, which could also be a redevelopment project.Simon is of course peeved. ...
And the winner is? The field may not yet be filled.
The Journal story in today's paper reference in my previous post also has a companion piece on page C10 that I commend to you. In short, Simon, thanks to the unsecured creditors' support, is in the catbird seat. But the GGP/Brookfield bid could have something going for it. And for the first time Uniball-Rodamco is mentioned as a possible bidder. (Rodamco North America owned some of these malls a decade ago, including a bunch of the trophy properties, only to end up having that arm acquired by Simon, Rouse (now GGP) and Westfield back in 2002.) I guess what goes around can come around....Monday's...
Brookfield jumping into GGP
But you knew that already. This may be the preferred bid internally as I would imagine Brookfield would keep management intact, while Simon wouldn't need to do so.One thought here is whether Brookfield will get a good chunk of the company but sell Simon some of the assets it covets to make them go away. That makes sense to some extent but then Simon will want the trophies, the properties that make GGP valuable. You don't want to end up with a shell or a company that just has dogs in its portfolio. Honestly, I have no idea what is going to happen next. I do know that it ought...
As the pot boils...
We continue to watch the Simon and GGP story. With my luck another letter will go out as I am typing. Here's a few interesting tidbits in the interim:I liked looking at this operating pro forma put together by Naveen Selvaraj. (PS: the answer to his question #2 is, typically yes, which is why you have seen cherry-picking deals in the past. Of course, if Blackstone comes into the deal that could well be what happens, a la EOP.) Todd Sullivan thinks Simon's plays so far are "near panicked." But if CRE prices are rising.... (dead cat bounce or not? Don't ask me.)Simon bonds are weakening...
More Simon & GGP - gotta love lawyering
This is an interesting one. Simon (Blackstone?) has sent yet another letter to GGP in public, this time providing comments -- and disclosing -- a proposed non-disclosure agreement related to their dancing together during any discussions. Simon says, to wit: "General Growth's comments to the non-disclosure agreement are not constructive and make clear your apparent interest in precluding our offer from moving forward or being considered by your stakeholders." Of course. They are stalling for time. Time for a white knight. I'm sure you have heard that the company is taking the step of...
Negotiation Tactics -- GGP and Simon
Ah yes, getting to yes. Negotiation. We lawyers thrive on this. And that is exactly what I thought when I saw the Simon letter to GGP yesterday. You can see it reprinted here at Retail Traffic or here at Citybizlist Baltimore.My take? Great posturing by Simon. First they say we're not interested, then they say we might be, and now they say they want the company but it has to be done quickly and at their price. I think it is a classic tactic designed to try to scare the creditors and perhaps the court into pushing for Simon's offer. And it is a smart move. By trying to cut off...
Simon bids officially for GGP -- it ain't over 'till it's over
As the Journal wrote today, this is just the beginning in my humble opinion. $10 billion does not buy the company. The WSJ identifies Brookfield and Vornado as potential bidders. And don't be shocked if one or two other players jump into the game as well, including private equity players that might keep the company intact.Interestingly, with three possible bidders from the dirt game, could this turn into another Urban Retail Properties/Rodamco scenario, whereby the bidders each take chunks of the company, dividing the spoils? It makes the deal cheaper and probably eliminates any antitrust questions...
And the worst sector is....
I'm sure people will argue this one, but my nominee is the hotel/hospitality sector. It has really been taking a beating in this recession. Here in Chicago, a few hotels near ORD have closed and others are practically giving away rooms. Even luxury hotels are not immune, as evidenced by the recent announcement that the Ritz-Carlton Lake Las Vegas would shut down in early May.There has also been news that some properties are being sold for a fraction of their previous value, while others are just going back to the lenders.I think the watchword in the business right now is hang on for dear...
How low could you go?
Any positive news is, of course, good for us in the real estate business. So when the great Jeff Vinzani posted a couple of optimistic stories on Twitter I was happy to see them! 41% of private equity investors plan to boost their investments, but 29% plan to decrease exposure. And JLL is reporting that lenders are looking to rebuild their loan portfolios. This bodes well, of course, for people looking to buy on the cheap or hopefully refinance if they can find the equity to kick into the deal.What I found most encouraging -- and I am also hearing this anecdotally -- is that...
TIC investing -- ouch!!
We've seen this coming. Years ago I sat in my boss's office, and we were wondering about the intelligence of highly levered tenant in common (known in the biz as TIC) deals. Why? Because we were hearing tales of investors having absolutely NO business in these kinds of transactions, such as people putting the profits from their family farm into a shopping center with a 80% LTV loan in the CMBS market. My boss said, "If the market corrects while these people are still in the deal they are going to be literally wiped out."Now, I'm not saying that is what happened here in this WSJ story, but.......
Tuesday Tidbits - Groundhog Day edition
With a dusting of snow on the ground where I live, there are no shadows to be seen, supposedly meaning an early spring. Guess I should start working on my golf swing!A quick followup on Stuyvesant Town and Peter Cooper Village: some excellent thoughts from Michael Mandel and Llenrock Blog.If you are in a traditional movie rental business; i.e. a storefront on dirt, you might well be hosed.A lot of New York news today.... Cushman & Wakefield has hired Glenn Rufrano as its president and CEO; he is also a GGP board member.Goldman is pulling out of the Hudson Yards development in New York. (reg....