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Is This the End of the Road for Simon's GGP Bid?

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According to the Wall Street Journal, talks between Simon and General Growth have reached an impasse.

Potential antitrust concerns are the issue. The parties think that if a deal went through, Simon would need to divest itself of some of GGP's assets. But there's disagreement over what percentage of the assets Simon would have to sell. Moreover, Simon would not want to sell any of General Growth's top assets. For its part, General Growth is saying that Simon may need to consider divesting a larger percentage of the portfolio.

Simon had offered in recent days to commit to divesting up to 10 million square feet, amounting to roughly 25 to 30 malls, if the Federal Trade Commission requires such action in its antitrust review of any Simon-General Growth combination, these people say. But Simon wants to be able to walk away from the deal if the malls it is required to sell average annual sales of $450 square feet or more. The industry average is roughly $300.

General Growth's lawyers responded that Simon needs to be prepared to divest more than 10 million square feet, but they didn't specify how much more.

As a result, opinions on whether the talks between the two firms will continue seem to depend on who you ask.

A report from industry newsletter REIT Newshound that was picked up by other news outlets indicated that Simon is thinking of abandoning its bid. Yet a separate report later in the day by Reuters quoted sources saying that Simon is looking at ways to revise its bid.

The Journal's story came next and says merely that Simon is "pondering" its options.

So is this the end of the road for Simon's bid?

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Elaine Misonzhnik

Senior associate editor Elaine Misonzhnik has been writing for National Real Estate Investor since June 2006 and has covered commercial real estate for more than 12 years. She first became...
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