General Growth Properties Inc – Take Over Target

General Growth Properties Inc used to be know as GGP; after filing for bankruptcy protection back in April 2009 the stock has been relisted OTC as a pink under the new ticker GGWPQ. If you read any of the discussion boards about this stock then you should already be familiar with the large group of lovers and haters of the stock. All I have been able to piece together from the message boards so far is that people who love this stock provide no evidence to suggest it should be valued higher and people who hate the stock just yammer on about the range that it has traded since filing for chapter 11.

After digging a little deeper, not that you need to dig much, you can find a few interesting facts.

o GGP has been in the shopping center business for over 50 years

o One of the Largest REITs in the USA

o Involved in buying, selling, developing, and managing real estate

Bankruptcy Restructuring

o To restructure finances and de-leverage balance sheet because collapse of credit markets made it impossible for GGP to refinance maturing debt.

o Bankruptcy Judge (Gropper) has been making beneficial decisions to allow GGWPQ to restructure providing lots of time to refinance the dept the way the company wants.

o Financial performance of the company has been very positive since filing for chapter 11.

I have been reading a number of blogs that post frequently about General Growth Properties Inc. Most are well versed in the company’s affairs, but there just seems to be something missing that no one has really been discussing. Alright, you caught me…I’m talking about potential takeovers whether hostile or voluntary. Who you might ask, would be interested in purchasing some of the best income producing properties the United States of America has to offer?

I’m sure a large list of companies and personal investors immediately pop into your head like they did mine. Let’s be somewhat realistic here and think of some real potential Takeover Tightens. Potential buyers will all have a number of required attributes:

o Deep pockets! Cash is King after all
o Highly Informed about Commercial Real Estate

When you think of companies or individuals that possess these attributes think again and then remember this: Real Estate Prices have tanked, especially in the USA and there is potential for another major drop in commercial real estate on the horizon.

So who’s got the goods? Look no further than some of the many Cash Flush REITs. According to CNN Money in June 2009 REITs have been raising cash to go on the offense to acquired distressed properties and distressed REITs are also targeted. Some of the well know names that are on the office include the following:

Boston Properties (BXP), Regency Centers (REG), Simon Property Group (SPG), and Vornado Realty Trust (VNO).

David Simon, CEO of Simon Property Group, was even quoted in a recent CNN Money article stating that “One big opportunity the gang at Simon is keeping an eye on is the portfolio of General Growth Properties.”

American REITs are not the only ones on the offensive though. Look to some of the larger Canadian Players, who have experience a tempered downturn compared to American rivals, to make some major acquisitions in the coming months.

The most notable cash raising I can find is that of Brookfield Properties Corporation and Brookfield Asset Management Inc (a Canadian Group) who on August 20, 2009 announced a $4 Billion Real Estate Turnaround Consortium. Bling Bling, according to the article this Mountain of Cash is dedicated to investing in under-performing real estate with a minimum of $500 million to be allocated to global purchases and the remainder, $3.5 Billion, available for North American Purchases!

Look out General Growth Properties, the vultures are here and ready to scoop up some of your assets. There are two scenarios I can see for General Growth, a fire sale of individual properties to the highest bidders, or a share buyout. I wouldn’t be at all surprised if a total buyout is on the way, but there will likely be more than one bidder so I buy today. Bought at $2.82.