Bull Bear Report Feb 25 2010

General Growth Could Split in Two

Laura Lorber

Few would fault General Growth Properties employees for coming down with the job jitters. Ahead of a big court hearing on its bankruptcy reorganization, the real estate investment trust said it planned to split in two as it seeks to fend off a rival's hostile takeover.

What's more, a group of the REIT's creditors opposes the plan, which calls for an investment from Brookfield Asset Management. The unwelcome suitor, Simon Property Group, called the move "a complex piece of financial engineering that is so highly conditional as to be illusory."

The proposal would funnel troubled assets, such as New York City's South Street Seaport, into a smaller, higher-risk company named General Growth Opportunities. Healthier assets, such as Boston's Faneuil Hall, would stay with the larger entity, which would keep its name. General Growth is one of the largest REITs in the U.S.

Meantime, another suitor, Australian mall owner Westfield Group is making its own bid for the REIT.

Write to Laura Lorber

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