25 February 2010

GGP Shuns Simon, Picks Canadian Buyer

Indianapolis Star

Bankrupt mall developer General Growth Properties Inc. said today it's agreed to a recapitalization plan with Brookfield Asset Management Inc.

The plan would allow Chicago-based General Growth to sidestep an acquisition by Indianapolis-based Simon Property Group.

General Growth, the nation's No. 2 mall development company after Simon, said Brookfield would invest $2.6 billion in the deal, which would split General Growth into two companies.

The proposed plan would allow General Growth to emerge from bankruptcy "with a diverse portfolio of high-quality income-producing assets, strong cash flow and a solid balance sheet," it said.

Simon, which unveiled its $10 billion offer for General Growth earlier this month, didn't have an immediate comment on the new plan.

The General Growth-Brookfield plan is subject to approval by bankruptcy court, as the Simon takeover would be.

Brookfield is a Toronto-based investment company specializing in commercial real estate properties. It would take a 30 percent ownership stake in General Growth under the proposal.

The new publicly traded company that would be split from General Growth would contain its non-core assets, including its master planned communities and landmark developments such as South Street Seaport in New York that have little or no current income.

The deal with Brookfield offers General Growth shareholders $15 a share in stock. Simon's offer would give General Growth shareholders $9 a share in cash and real estate.

Under the deal with Brookfield, General Growth said it would look to raise up to $5.8 billion in additional capital, through asset sales and other means.

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