It looks like the commercial real estate market is finding the bottom and starting to consolidate. Simon Property Group has made an offer to absorb General Growth Properties for 10 billion dollars.
General Growth is a major mall operator owning such showcase properties as Faneuil Hall in Boston and The South Street Seaport in New York. They got buried under a 25 billion dollar debt burden as they expanded into the teeth of the downturn. The late 2008 bankruptcy looks like it has worked as the debt is now at a much more reasonable 7 billion dollars.
Simon Properties move makes me think that we may be seeing a baseline of mall and shopping center markets where investors will truly understand the debt loads that shopping centers can carry going forward.
Simon Property Group Inc (SPG), the largest U.S. real estate investment trust, made Tuesday what it called a $10 billion offer for the bankrupt General Growth Properties Inc that would pay creditors back in full and end one of the largest U.S. bankruptcies on record.
Simon said it would offer $6 per General Growth share, or roughly $1.9 billion, plus a stake in property assets it valued at about $3 per share.
The offer would provide a 100 percent cash recovery of par value plus accrued interest and dividends to all General Growth creditors, an amount which totals about $7 billion. via Fox Business