WORLD PROPERTY CHANNEL ®

David Simon

(CHICAGO, IL) -- Working its way out from under a $20 billion debt load, Chicago-based General Growth Properties (Pink OTC: GGWPQ) today politely declined to accept a $10 billion buyout offer rival Simon Property Group.

Simon is the largest mall developer, owner and operator in the U.S. with 350 properties. General  Growth is No. 2 with 200 malls.

Simon is offering $9 per share for General Growth's stock.

In a letter to David Simon, chairman and CEO of Simon Property Group, General Growth CEO Adam Metz says the offer isn't strong enough to persuade General Growth from halting its current efforts to extend or pay off delinquent or maturing loans.

General Growth sought Chapter 11 protection in April 2009. Since then, it has managed to restructure most of the $15 billion in mortgages on its malls and move those properties out of bankruptcy. But it still needs to restructure some $7 billion in unsecured debt.    

Please see related Real Estate Channel postings:

• General Growth's Fresh Funding Lifts 96 Properties Out of Bankruptcy Protection With 16 Left to Save, Jan. 25, 2010
• General Growth's Chapter 11 Filing Called Largest in U.S. Retail Bankruptcy History, April 17, 2009
• General Growth Properties Stock Price Rise Puzzles Wall Street, April 7, 2009
• Fourth General Growth Properties Mall Seized, March 23, 2009
• General Growth Wins Breather but Hedge Fund Manager Predicts Bankruptcy Filing Coming, March 17, 2009
• Clock Ticking on Bankruptcy-Saving Deal for General Growth Properties and Subsidiary, March 12, 2009
• General Growth Properties' Piggy Bank is Low as Debt Piles Up, Feb. 24, 2009
• General Growth Properties Dumps 3 Trophy Retail Centers in Public Marketplace, Dec. 22, 2008

In its letter, General Growth reiterates its process for exploring all potential alternatives for emergence from bankruptcy and maximizing value for all of GGP's stakeholders.

The full text of GGP's letter to Simon follows:

 
Simon Property Group, Inc.

225 West Washington Street

Indianapolis, IN 46204

Attention: Mr. David Simon, Chairman of the Board and Chief Executive Officer

 

Dear David:

Thank you for your letters dated February 8 and 16, 2010 in which you indicated Simon's interest in acquiring General Growth Properties, Inc. (the "Company").

We appreciate that you took the time to meet in person with management, UBS and Miller Buckfire to explain your indication of interest, as well as provide your view on the timing and diligence process you require in order to convert your indication of interest into a fully documented definitive proposal.

We have been discussing your letter with your financial advisors during this past week. Our advisors have also discussed our position with you as recently as yesterday.

We and our board of directors have given considerable thought to your indication of interest and have concluded based on discussions with other interested parties that it is not sufficient to preempt the process we are undertaking to explore all avenues to emerge from Chapter 11 and maximize value for all the Company's stakeholders.

As we indicated during our meeting, we are about to commence a process to explore several potential options for the Company's emergence from Chapter 11, including a sale of the entire Company as you have proposed as well as a capital raise.

The Company and its advisors have been working over the past several months to prepare the Company to launch this process.

We will be providing detailed information on the Company, including a confidential information memorandum, financial projections, and asset level information to participants. We will also provide access to an electronic data room.

As we are committed to fully exploring all potential options available to the Company, we would like to include Simon as part of this process.

We believe the information we would provide to you as part of this process will enable you to better understand the Company, get to a higher valuation, and provide a fully documented offer.

We understand from our meeting with you and the press release you issued this morning that time is of the essence. We feel the same, and intend to run our process in an efficient and expeditious manner.

We are currently finalizing the information memorandum and plan to send materials to participants in the process by the beginning of March.

We would expect to receive indications of interest within 4 weeks of the launch of the process. In order to expedite your participation and evaluation of due diligence information, we will be sending to you shortly a markup of the NDA you provided to us during our meeting in Chicago.

Again, we appreciate your interest and we recognize the potential value that Simon could bring as an option for the Company to emerge from Chapter 11.

The Company intends to pursue the process described above and we look forward to your participation.

However, we reserve the right to pursue any proposals that we receive prior to or after formally launching the process so that we can maximize value for all stakeholders of the Company, and we reserve the right to change the process at any time we determine appropriate and without notice.

We would be happy to discuss this response further. To that end, you should feel free to contact either UBS or Miller Buckfire.

Sincerely,
Adam Metz

(CEO, General Growth Properties Inc.)

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