Hunting Quail?
Simon Property Group, the nation’s largest operator of shopping malls, has bid $9 a share for General Growth Properties, the #2 operator, currently languishing in Chapter 11.
General Growth is worth more than that, bankruptcy notwithstanding, says their biggest shareholder:
William Ackman’s Pershing Square Capital Management LP, General Growth’s largest shareholder, said in December the stock is worth $24 to $43.
Of late, it’s selling for $13 or so, which suggests the possibility of a bidding war. And everything isn’t necessarily going to come up roses for Simon:
Simon and General Growth have overlapping portfolios in areas including Chicago, Dallas, Houston and the New York-Northern New Jersey region, which may lead to “oversaturation” in some areas.
Include Oklahoma City on that list. Simon owns Penn Square Mall, the city’s largest by sales; General Growth owns Quail Springs Mall, the second-largest. (Quail Springs is actually about 70,000 square feet bigger, but both malls exceed 1 million square feet.)
Now for some guesswork. At the moment, Penn Square has a waiting list: tenants want in, and there’s no room. There seems to be no such issue at Quail Springs. If Simon took over Quail Springs, would it be upgraded to Penn Square standards (and, presumably, rents)? Would the stores that are patiently waiting for Penn Square space accept spots in an improved Quail Springs? Or would Simon, deciding that one regional mall is quite enough, thank you very much, starve Quail to death?
For the moment, though, General Growth has given Simon the cold shoulder, prompting Simon to threaten to withdraw its bid if GGP doesn’t respond.
McGehee »
18 February 2010 · 12:15 pm
I read the title of this post out loud to some lawyers in my Dick Cheney voice.
I also like to startle my wife’s cats with sudden loud noises.