Bankrupt REIT General Growth Properties is reportedly expecting a better recapitalisation offer from Brookfield Asset Management now that Simon Property Group has offered what is calls a more “favourable” proposal.
General Growth has already submitted a plan to US bankruptcy court to accept a $6.5 billion investment from Brookfield, William Ackman’s Pershing Square Capital and Fairholme Capital Management, according to a Reuters report.
Simon, however, whose $10 billion offer in February to take over GGP entirely was rejected, is now offering the same terms as Brookfield’s plan but without the warrants that GGP proposes to issue to Brookfield. The REIT said in a statement its proposal also includes a $1 billion co-investment commitment from hedge fund Paulson & Co.
According to the terms of the Brookfield and Fairholme-Pershing agreements, GGP would give Brookfield warrants to buy 120 million shares of GGP, reportedly worth several hundred million dollars.
A hearing on Brookfield’s original offer is scheduled for 29 April, and it is believed that any competing bid would have to top that offer. Spokespeople for Brookfield and GGP were not immediately available for comments.
GGP is reportedly in talks with a number of investors about a recapitalisation plan, but according to Bloomberg the troubled mall REIT is seeking a revised offer from Brookfield, which could include a lower amount of warrants or a higher bid.
General Growth Properties, the US’ second largest retail REIT with shopping malls in 44 states, filed for bankruptcy last April, taking down with it 166 regional shopping centre subsidiaries despite the fact the subsidiaries were structured as “bankruptcy-remote” entities.