Simon Property offers $10 billion for General Growth


Simon Property Group Inc (SPG.N) made what it called a $10 billion offer for General Growth Properties Inc (GGWPQ.PK) that would end one of the largest U.S. bankruptcies on record and combine the two largest U.S. shopping mall owners.

Simon, the largest U.S. real estate investment trust, said on Tuesday that it would offer $6 per share, or roughly $1.9 billion, plus a stake in property assets it valued at about $3 per share.

General Growth shares jumped 10.6 percent to $10.40 in trading before the market opened.

Simon expects the transaction to add to its funds from operations, a key profit measure for a real estate investment trust, in the first year after closing.

General Growth’s official unsecured creditors committee supports the offer, Simon said in a statement.

The offer would provide a 100 percent cash recovery of par value plus accrued interest and dividends to all General Growth creditors, an amount totaling about $7 billion.

General Growth declared bankruptcy in April with 158 of its 200-plus malls after trying for months to refinance its debt. It listed total assets of $29.56 billion and total debt of $27.29 billion.

The Chicago-based company, the second-largest U.S. mall owner, owns such valuable properties as South Street Seaport in New York and Fashion Show in Las Vegas.

Indianapolis-based Simon owns or has an interest in 382 properties comprising 261 million square feet of leasable space in North America, Europe and Asia. These include such well-trafficked malls as Roosevelt Field on New York’s Long Island and Sawgrass Mills Circle near Fort Lauderdale, Florida.

The transaction is not subject to a financing condition. Simon plans to finance it with cash on hand, existing credit facilities and equity investments in the acquisition by institutional investors.

Lazard Ltd (LAZ.N), JPMorgan (JPM.N) and Morgan Stanley (MS.N) are financial advisors to Simon. Wachtell, Lipton, Rosen & Katz is legal advisor.

Simon shares were up 23 cents at $72.23 in premarket trading.