Posted by: BayAreaComRE | December 30, 2009

The Battle Over General Growth Properties

An interesting debate has sparked over the last year in regards to one of the largest national retail REIT’s General Growth Properties (OTC: GGWPQ.PK) value and the two major opinions seem to really be at each other’s throats.

In late November 2008, GGP missed a deadline to repay $900 million in loans backed by two Las Vegas retail properties. The company went into bankruptcy proceedings in March of 2009 due to it’s inability to cover debt service on it’s portfolio, marking the largest Chapter 11 filing of a real estate company since the early 80’s.

Since then, Bill Ackman, head of Pershing Square Capital Management, one of the largest shareholders of GGP and Eric Hovde, head of Hovde Captial Advisors, one the largest short position holders of GGP have engaged in form of valuation warfare, presenting in-depth analysis speculating on the eventual result of the GGP restructuring.

It was also announced recently that GGP may be acquired by its larger rival Simon Property Group in a deal that could be worth up to $30 billion, those talks are purely exploratory at this point.

We’re excited to see where GGP emerges from the resructuring, partially because it will be bellwether for the real estate industry and consumer sentiment since a large majority of GGP’s tenants are national retailers, and also because one of the SF COM RE writers has a frightening long position in GGP.

We have posted the full blow-by-blow for you reading enjoyment.

Ackman’s initial valuation – May 27, 2009

Hovde’s valuation – December 14, 2009

Ackman’s rebuttal – December 22, 2009

Hovde’s rebuttal – December 29, 2009


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