Simon Bids for General Growth in Hostile Takeover

Indianapolis-based mall giant Simon Properties Group Inc. lobbed a $10 billion hostile takeover bid today against bankrupt rival Chicago-based General Growth Properties, according to the Wall Street Journal and others. 

Some highlights of the bid and overall situation:

  • GGP is currently in bankruptcy, buried under $7 billion in debt after years of easy credit fueled its massive expansion efforts during the last decade. 
  • Simon’s first takeover bid of GGP was more friendly and kept quiet.  Simon chose to make the bid hostile and public after GGP reportedly ignored the bid.
  • Simon isn’t the only one vying for GGP.  Canadian-based Brookfield Asset Management has also been negotiating with GGP; however, with Brookfield’s infusion of capital GGP would still remain a separate company.
  • Brookfield has already given $1 billion to GGP in order to alleviate debt, so it already has an internal voice in GGP’s decision making.  If GGP chooses to accept Brookfield’s capital to settle the rest of its debt, it could emerge from bankruptcy as soon as next year. 
  • GGP could also quickly emerge from bankruptcy on its own, as they’ve already made agreements with their creditors to restructure loans and pledge their malls as collateral.
  • The ultimate decision will not only be up to GGP’s board, but also GGP’s debtors and the bankruptcy judge.
  • After all this news, GGP stock soared, and thus analysts expect a slightly sweetened bid by Simon.  However, part of the stock inflation is due to the volatility of GGP on the pink sheets, where stocks are listed during bankruptcy. 
  • If the takeover occurs, the new Simon would own 560 malls, a third of the U.S. market. 
  • Even though they would own a third of the country’s malls,  half of the top-ranking malls would be held by the new Simon after takeover.   These malls are defined with sales of more than $400 per square-foot. 
  • Simon and GGP are currently the two largest and oldest mall owners in the country.
  • Large-scale chain retailers like Gap and Limited Brands would be negatively impacted by a strengthened Simon, who would hold twice as much leverage over them as they negotiate locations while Simon tries to fill their malls.  
  • Wow?

For reference purposes, a list of all of Simon’s malls can be found here, and a list of GGP centers is here

What do we think about this?  Yea/Nay?  Leave some comments and let’s get a discussion started.

55 Responses to “Simon Bids for General Growth in Hostile Takeover”

  1. This is definitely going to have an effect on the malls of NJ as Simon will now be the predominant company running the Jersey Malls. The two big properties they will get are Woodbridge and Willowbrook. They will also get Paramus Park. I wonder if Simon will invest any money into them for expansions/updates…Paramus Park was supposed to have a lifestyle expansion…maybe that’s back on the table?

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  2. This will also impact Maryland and give Simon a bigger stake, putting them against Westfield. If everything goes through, they will have control of White Marsh Mall, Towson Town Center, Owings Mills Mall, Mall in Columbia and Laurel Centre, in addition to controlling Lakeforest. Montgomery Mall and Annapolis Mall will still be under Westfield.

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    SEAN Reply:

    @mallguy, I put the press release on the Willowbrook page but, didn’t have the time to edit it.

    I like the idea of Simon buying GGP, however I wouldn’t be worried of Simon getting too large because the DOJ will require some assets on both sides to be sold to allow such a transaction.

    In the long run this could benefit Westfield, Taubman, Macerich & other mall opperators who are healthier then GGP & will have a food courts worth of malls to expand there own portfolios.

    I wonder what you think about this. Also As I type, I realized as Simon has the most malls in New York, the #1 mall is GSP a Westfield property & within the city limits you have Queens Center, a Macerich Property. In the Washington/Baltimore area most malls are owned by GGP but, the #1 mall is Tysons Corner a Macerich mall. Interesting how the landscape played out.

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    mallguy Reply:

    @SEAN,

    In looking at this, the only region where Simon/GGP will hold a monopoly in NJ is Middlesex Co. Simon owns Menlo and Brunswick Square…it will now own Woodbridge Center. With the demise of the “local department store,” I’m interested in seeing what resources they will put in. Menlo is the successful mall, Woodbridge is slightly struggling. How will they handle the Fortunoff vacancy?

    In terms of expansion of the non-Simon malls in NJ, Short Hills doesn’t really have the room for something large, but in 5 years, I wouldn’t be too surprised to see them get a Cheesecake Factory or Grand Lux Cafe (if they decide to expand), as the only remaining room is near the Macys mall entrance. They will focus on updating their tennant lineup, as will Freehold.

    If Simon were to take over Westfield or Macerich (both are pretty healthy now) DOJ will definitely be looking into this in terms of antitrust.

    A little more south, Freehold is surrounded by Simon malls and one Vorondo mall (Monmouth). Freehold will be fine.

    Long Island will have a Simon monopoly (I already think they do) and the Westfield Malls in MD (Annapolis and Montgomery) will be just fine.

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    SEAN Reply:

    @mallguy, If this deal happends, I could see Macerich going after Tysons Galleria in whole or in a joint venture with Simon. Either way you may see both Tysons malls becomeing a single mega mall. And what a mega mall it would be.

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    mallguy Reply:

    @SEAN, Considering they are building the Tysons 123 Silver Line Metro Station on the vacant land between the two malls on Chain Bridge Road, this is a pretty viable option. They just need to decide how they will get the mall over Chain Bridge Road

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    SEAN Reply:

    @mallguy, What would be the easyest way to bring the malls together.

    1. skybridge over 123 Chainbridge Road similar to South Coast Plaza.

    2. Glassed enclosed walkway similar to Somerset Colection over Big Beaver Road.

    3. A complete retail bridge similar to Queens Center over 92nd Street.

    Do you incorporate direct conections from the new Metro station to both malls, or build a central access point.

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    mallguy Reply:

    @SEAN, From what I heard, WMATA was already planning a skybridge over Chain Bridge Road to connect to Tysons Corner Center. I am curious as to where it will connect. The mall does not have an entrance in the area of where the Metro station will be and where there is an opening, there’s a parking deck there. An even bigger challenge is connecting Tysons 123 to the Galleria. The expansion will not only have to go over Galleria Drive, but it will have to either go through 2 parking decks or Neiman Marcus would have to be moved. I’d be interested in seeing how that is addressed.

    I’d love to see a “retail bridge” though, but it’s imperative a climate controlled connection between the two is established.

    I’m still annoyed they’re building the Silver Line above ground through the Tysons Corner area.

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    SEAN Reply:

    @mallguy, Since Macy’s has two full line stores at tysons, could Neiman marcus move into one & then build a new parking structure on the existing NM store site. This way the parking structure that blocks the way for future growth is removed & Macy’s doesn’t have duplicate stores in close proximity. Besides how menny Macy’s do we need at one mall complex? Both Fashon Show & King of Prussia had two stores & one ended up closing at each. Granted this was the result of the Merger of Federated & May but, the byproduct of excess Macy’s stores still remains

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    Gary Reply:

    @SEAN, however they do it, I think it will benefit the Tysons Corner area and make it into a world class shopping and entertainment destination.

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    SEAN Reply:

    @Gary, No doubt about that. It’s just the architect & planner in my head comeing out. LOL

    What ever is built I just want it to b padestrian friendly & easy to navagate.

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    Gary Reply:

    @SEAN, which of the Macy’s locations is larger? They could axe the one at T1 and keep the more upscale one at T2.

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    SEAN Reply:

    @Gary, I think you have the right idea.

    1. Move Neiman Marcus into the Tysons Corner Macy’s store.

    2. build a new parking structure on the current NM location. It should be large enough to replace the structure between the malls.

    3. build a series of padestrian bridges between both malls & include access to the future Silver line as well as new buildings as part of Tysons future development. This is where a joint venture between Simon & Macerich becomes esential. Perhaps bringing in a company like Charles E. Smith/ Vornado as part of the development team could expidite things

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    Gary Reply:

    @SEAN, well, that’s a good idea, although I would tear down the existing Macy’s at Tysons I, then build a small corridor from the existing mall which would lead to a brand new Neiman Marcus built to its specifications, as well as a longer corridor connecting Tysons I with Tysons II. There could be room for another department store anchor like Sears or even a Bass Pro Shops or Cabela’s anchoring the new corridor. In the new corridor, roughly between the two malls is where the Silver Line station would be built, which would make that station into a hub for the Tysons Corner area. Around the new corridor, new high-rise buildings, hotels and parking garages could be built.

    http://img710.imageshack.us/img710/8107/tysonscornermallafter.png (Here’s an aerial view of how I would do it.)

    SEAN Reply:

    @Gary, I think we are on the same page. I have a few questions: 1. how large is Macy’s at Tysons I? 2. How large are the surface lots around the store, can a portion of the lots be decked or can a parking structure be built in another location allowing for such an expantion. Bear in mind as I said in a prior post the garages between the malls would need to b reconstructed elsewhere to allow for padestrian access from mall to mall as well as access to the future Metro station.

    It’s a lot of reworking but, will reep enormous rewards in the end. The biggest problem is accessing money to complete such a project. I wonder if Macy’s & Neiman Marcus would be willing to do a store swop. It would be in there best interest to trade spaces in my opinion.

    mallguy Reply:

    @SEAN, I don’t have exact measurements, but I do think the Tysons Galleria Macys is bigger. For the Macys in Tysons Corner Center, there is a parking deck on the north side that faces Chain Bridge Road.

    I do wonder, however, if Neiman Marcus would be willing to move into one of the Macy’s as the average Neiman Marcus has a smaller square footage than the average Macys.

    For the Galleria, the entire west and North/South sides are surrounded by parking decks and the east side are decks, office buildings and the Ritz Carlton.

    I would love to see these two malls connected and I am confident if it gets done, they will be better than King of Prussia!

    Gary Reply:

    @SEAN, the Macy’s at Tysons I is 237,000 square feet on three levels, and I don’t have the information for the store at Tysons II but it is a three story building and is probably in the range of 250,000 square feet. With the new Neiman Marcus and mall expansion, the existing parking structure next to the current Macy’s would also have to be demolished, but this is where smart planning comes to fruition. A new parking structure could be built underneath the new expansion area, which could offer up to 500 spaces, and a multi-story parking structure could be built across Chain Bridge Road on the site that’s currently undeveloped. On the Galleria side, part of the parking deck surrounding Neiman Marcus would have to be demolished to accomodate the new expansion, and the Neiman Marcus building itself would also have to be demolished to make way for the corridor. The new corridor from the existing Galleria to the Galleria side of Chain Bridge Road would be a three story structure, with the bottommost level designed into a Metro station. Next to that area is where the multi-level parking deck would be constructed. Continuing towards Tysons I from the second level just above the Metro station area on the Tysons II side is where the elevated corridor would have to be constructed to go over Chain Bridge Road. This section could be a dramatic piece of architecture, with towering glass and steel, offering visitors a great view of the Tysons Corner skyline and the street below. There could also be a restaurant in the middle of the corridor, with some tables scattered around it. Think of how an airport would be designed, with large wide corridors and moving walkways, this could be done in a similar fashion for this structure.

    Gary Reply:

    @SEAN, here’s a cut away diagram of my idea:

    http://img713.imageshack.us/img713/4650/tysonscorner.png

    Gary Reply:

    @SEAN, oops, Tysons I is really Tysons II, and vice versa… no big deal.

    SEAN Reply:

    @Gary, Do you or Mallguy have access to about $500,000,000 in capital funds to build this expantion? LOL Honistly I think this is a great plan & would do wonders for the entire region. The best part is the ability to turn this complex into the worlds largest transit village.

    I can see it in the near future with a few adjustments the Macerich plan being constructed similar to Reston or the best parts of Arlington. After reading about both places extensively, I must ask Why not?

    For some insperation go to http://www.commuterpage.com & use the dropdown menue at the top of the page to read about the transit villages around Arlington County.

    There’s also a 50 minute video produced by Arlington called “Arlington’s smart growth jurney.” I highly reccamend all of us who visit this site regularly to take a look at this video. It could change how we think about the malls we comment about & what they could be as energy prices continue to rise & the need for housing in walkable neighborhoods near employment centers with access to local shopping & strong transit networks. Tysons could be all that & more if exicuted properly.

    Gary Reply:

    @SEAN, haha, I don’t have that kind of money but Macerich is already thinking long term by turning Tysons I into a mixed use development, replacing the parking garages with residential, offices, and entertainment. That alone is going to cost hundreds of millions of dollars to develop. If they decide to acquire Tysons II, then I’m sure they are going to try to find a way to connect both malls together, it may not be as dramatic as my idea but however they do it, it will be beneficial for the entire area.

    SEAN Reply:

    @gary, You aren’t holding out on me are you? LOL just kidding. Saw the cutaway & I got the idea. It looks like we’re on the verge of a great idea. Oh! something I forgot about, the road network needs to be totally redone withh wide sidewalks & not just widened with padestrian access. I know that 7 & 123 are being worked on as we type but, what is the point if Tysons remains auto dependent.

    See if you can view the video I posted about.

    mallguy Reply:

    @Gary,

    Very interesting ideas, however, WMATA is building the Tysons 123 station above ground, as well as in the rest of the TC area. Sadly, I wish they would have chosen to build it at ground level or below ground.

    Don’t have the $50 mil either, Sean, but if I did, there are a few mall priorities in NJ that need to be addressed first.

    The only downside I think will come out of the Silver Line is being charged for parking at TC1 or 2, or even at the area hotels. :(

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    mallguy Reply:

    @mallguy, Or Simon could just sell to Macerich (in the case of TC2) and let them take care of it. I hope up in NJ, they decide to sell Willowbrook, Woodbridge, Bridgewater Commons and Paramus Park (the former Genera Growth Malls) to Macerich.

    While GG did improve BC and the trade area keeps Willowbrook and PP up, WC needs an update (and so does PP) and Macerich has an awesome track record for revitalization, as evidenced by Freehold Raceway Mall and Tysons I.

    SEAN Reply:

    @mallguy, I would keep Bridgewater Commons because it is a good conpannian to Menlo Park& sell Livingston, Ocean County & Rockaway instead. I do agree with selling PP & Woodbridge though. Willowbrook? I’m on the fence about that one. It just depends on how much upside there is. Is tattoo Nation still open?

    What about Natick Collection? that mall by accounts on that thred indicates that it is really underperforming.

    Keep Columbia & sell most GgP & some simon malls around Baltimore do to it being a tough retail market. On the other hand I would keep Chicago & Atlanta intact with it’s solid performing properties.

    Gary Reply:

    @mallguy, If I were Simon, I would keep Natick Collection (perhaps rename it to the Galleria at Natick or back to Natick Mall since Collection doesn’t ring too well) and try to improve the retail offerings by bringing in more mid-scale tenants to the new addition to complement the upscale shops.

  3. Just my reaction too

    Wow! Just….wow. I saw the news byte in my local paper (since Simon owns the Forest Mall in the Fond Du Lac area).

    I don’t know though. I mean, they own Southridge in the Milwaukee area (specifically it’s in Greendale), and look what’s happening to that mall. Though I don’t think that mall’s fortunes are completely to blame on Simon. It was starting to slip under MIlls Corp.’s owenership.

    That one’s an easy fix though. You raze the former Younkers there and put in a lifestyle component, ala; Yorktown Center (closest example to me) in Lombard IL.

    The two GGP malls though…..what could they improve upon? Oakwood in Eau Claire needs a top-to-bottom remodel……it’s still stuck in 1986. Fox River Mall can’t expand….it’s basically land-locked, and considering it sits on former wetlands, I doubt the ground is stable enough to build out a second story addition. Not that it would help…..the mall’s got vacancies in it, which it still has to fill.

    I see Simon possibly…if this goes through, selling off Forest Mall and Bay Park Square, and possibly even Southridge (if they don’t get on the ball with that one in a hurry) to CBL or Westfield, or …is Macerich still in the game…..acquiring one or more of these would give Westfield or Macerich an entry into the WI market, and keeping Fox River Mall, since it’s the dominant player in this part of the state.

    This will be quite interesting to watch as it unfolds.

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  4. I would rather Simon not get the malls…I really don’t like the idea of a mall-nopoly. GGP may have some malls that drug them down, but they also have some very solid ones in their portfolio that would probably be negatively impacted by Simon ownership. Simon would take the competing mall and either marginalize it or deliberately kill it off.

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    Allan of IL Reply:

    @JT, I completely agree. I wish some of Simon’s malls would go to CBL, since at least their sites don’t have the weird website designs that both GGP and Simon use! I also wouldn’t mind if a few GGP malls were sold to Feldman(I believe most of their malls are in the Midwest), since I really like how they renovated Stratford Square in the west suburbs.

    Shame to now hear GGP has (supposedly) gotten rid of mall maps on their individual mall websites, and I hadn’t had realized it….

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  5. If GGP takes the offer, it’d be a windfall for its shareholders but I don’t know what the outcome would be for the mall industry. Both companies own some high profile properties, but they also both own a lot of stinker malls that will likely be closed or written off as bad investments. Do they have a plan for the portfolio, or do they just want to cherry-pick the winners and close the rest (a la Macy’s)?

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  6. No no no! I always hated Simon’s mall website layouts, remodels, etc.

    Plus it would lead to even more management sockpuppetry, as if that didn’t happen enough.

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  7. I hate the way Simon does their websites too. Especially the mall maps, but hey, GGP does it the same way now. GGP didn’t use to even PUT maps on their sites.

    There would be virtually no effect on the Michigan properties since Simon’s only Michigan mall is Briarwood in Ann Arbor (which bounced from Taubman to Mills to Simon in 5 years).

    GGP’s roster is interesting for Michigan, though:
    *Bay City, Grand Traverse, Birchwood: All former Homart builds from 1991-1992. Only mall in each market. Bay City is struggling; other two are solid.
    *Lakeview Square: Former Forbes/Cohen property, also the only mall in its market. Somewhat struggling; one wing is mostly big-box.
    *Lakeside: Former Rouse property. Super-regional with three solid anchors (JCP, Macy’s, Sears), one weak anchor (Lord & Taylor). Strong central corridor, very dead side wings.
    *Lansing: Entire east wing big-boxed, still holding onto a dead Mervyn’s->Steve & Barry’s. Struggling but not even close to dead. Former Forbes/Cohen property.
    *Rivertown Crossings: Super-regional built by GGP. Very strong all around.
    *Southland: Solid all around despite a dead Mervyn’s. Nothing too special. Former Rouse property.
    *Crossroads: Also rather solid, nothing too special. I think this one may have been Forbes/Cohen too.
    *Westwood (Jackson): Has a Walmart as one of its three anchors; others are JCP and Elder Beerman. Very static tenant roster (only losses in the past ~5 years have been KB Toys and Gap), has a theater dead for 10+ years. Yet another Forbes/Cohen carryover.

    If Simon took GGP over, I would love to see them fix up Bay City, which I have always thought of as a very underwhelming mall. It seems like it should be doing better than it is; Bay City as a whole is grossly under retailed, and yet their mall is a joke.

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    Bobby P. Reply:

    Dang it. Obviously I meant “used to.” No way am I falling into such a common grammatical incorrectness.

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  8. Simon’s malls have been a case of ‘management sock-puppetry’ since the mid 1970s, when then Melven Simon & Associates created its own management firm, which basically ousted all local management groups of malls (what were called “Merchants Associations”…usually a team of local / regional management, usually of local or regional tenants within the mall, headed up by a ‘head manager’ of sorts) which they developed and built. By creating this new division, Simon wound up replacing these local management teams with their own hired managment whom in turn, basically sapped the life and variety out of many of their malls.

    It was all done to attract more national tenants at the turn of the decade (1970s into the 1980s).

    My hometown mall is a textbook case of this happening.

    Now fast forwards to today. They can’t even fill in the vacancies, because of the ridiculously high rents. I don’t care they (high rents) are what keeps Simon afloat. You can’t get new businesses and services into such space when it’s not financially affordable for new upstarts.

    Now that I’ve had time to ponder this deal over and type that up and go over the other comments after mine….I have to agree. This deal smells a bit iffy. Great for Simon the corporate entity, bad for some malls within both portfolios.

    Then again, maybe it’s time my hometown mall goes to a new owner within the region that can bring rents down to more of a fair level, thus the ability for new business (local and national) to enter the region once the economy ticks upward, and bring back more of a sense of community into the complex.

    A remodel would be icing on the cake too. The mall hasn’t been remodeled since 1998.

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  9. Concentration of ownership is almost never a good thing. I also have to wonder how Simon will finance this and continue to maintain upgrade properties. Malls are valuable to the extent that no one is building more of them and the best locatiosn are occupied for the foreseeable future. OTOH, malls are white elephants and there numbers will continue to decline for the forseeable future. it would be smarter for Simon to diversify or wait until GGP liquidates and cherry pick the best properties. This is not a good market for spinning off properties after a sale. Commercial real estate is showing the same problems that have occurred with residential.

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  10. Here in AZ, Macerich, through Westcor, has a practical monopoly on the malls and many lifestyle centers too. They own all the AAA and A+ malls (Super-Profitable Scottsdale Fashion Square along with Biltmore Fashion Park, La Encantada, Kierland Commons, Chandler Fashion Center for example).

    ALL of the high-end retailers are in Westcor centers (Neiman Marcus, Saks, Barney’s, Louis Vuitton, Tiffany, etc.). Vacancies are a problem in lower-end malls that had Mervyn’s as an anchor or who had Robinsons-May AND Macy’s (of course the higher-end malls quickly filled in the slots…that’s how we came to get Barney’s and a GINORMOUS Forever 21).

    Simon only has the local (rundown) one-story sprawling Mills as far as I know. And yes, I HATE Simon’s websites too. I know GGP has a lot of very desirable AAA properties in the US, like Ala Moana in Honolulu.

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  11. Whatever happens, happens, if Simon does buy General Growth Props, Simon would get rid of malls that are not up to their standards, maybe sell some to Westfield and Macerich and keep malls worth keeping like Ala Moana and other of their Premium props

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    AceJay Reply:

    Simon has no standards. Look at QBM, Brunswick Square, and Franklin Mills.

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    Debbi Reply:

    @AceJay, And Palm Beach Mall. Oops, that’s closed now.

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    SEAN Reply:

    @Debbi, As PBM goes, I don’t understand why that mall was left to die. However there are menny PBM type malls around the US. If simon & GGP merge, most of those malls will be sold to other real estate companies & that will be the best thing for all.

    Franklin Mills was in deep trouble well before Simon took over.

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    Tim Reply:

    @AceJay, add Nanuet to the list.

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    Gary Reply:

    @Tim, also Century III in Pittsburgh.

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    mallguy Reply:

    @Ed, At least in NJ, I think Macerich can do a better job with revitalizing malls than could Simon. Just look at what Macerich has done with Freehold Raceway Mall. If they ever got Quakerbridge, may then the expansion would move forward.

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  12. GGP did a pretty crummy job at most the properties where I live. Simon could do better, but what do you expect? No one takes pride anymore.

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  13. Hmmm, I’ve always wondered if Simon has a tendency to charge higher-than-normal rents in their malls. (and’ve always held a deep suspicion this goes on) There’s one Simon mall I sometimes make it to once in a great while where at least when I last went to the mall 1-2(?) years ago, they had some newer independent tenant that had barely renovated the old Suncoast space! I wonder if this is still the case there, since I haven’t needed to shop there in a great bit of time. (lmao)

    My fantasy would be for General Growth to merge with CBL. :) I know this wouldn’t address the crappy design of Simon’s website, but at least it would much easier to browse the individual GGP mall sites! It probably also helps for whatever reason to me(don’t ask), it seems like CBL has always been a very well managed company.

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    Gary Reply:

    @Allan of IL, I think CBL merging with GGP would pose a big risk for CBL because most of their properties are the dominant centers in their market whereas GGP’s centers can range from dominant centers to ancillary malls. Also, I don’t think CBL has that kind of money to support such an acquisition.

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    Allan of IL Reply:

    @Gary, That is an interesting point I didn’t think about a lot! You are right that General Growth’s malls are all over the place(from ancillary and C- and below malls to upscale), while CBL tends to stick to moderate level(but not too downscale or upscale) malls that have decent market share. And of course, GGP has enough ancillary malls that CBL would probably vote down any merger with them. (let alone you’re correct that either company would all but never merge with each other, as CBL would have tons of ancillary malls to sell off)

    I guess I just wish(bare minimum) Simon would improve their website and make it easier to view, and better manage some of the malls they do. Ditto with GGP, although I sadly doubt either company will improve their website anytime soon…

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  14. They own the mall in BG, I believe, so it would be nice if they could get some more varieties of stores in here. There are too many clothing\jewelery\shoes and not enough other things. Our bookstore closed down so that just left the BN and Book Gallery in town.

    It would also be nice if they would put something in the vacated Goodys site that’s stood empty for about a year now. It’s so lonely. ; . ; GGP hasn’t had a very good management of their property for a while.

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  15. What if Westfield bought GGP?

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  16. Seeing the rather decent upgrades (new lifestyle streetscape and higher end stores) Simon made to Cordova Mall in Pensacola, I wish they would acquire a property in nearby South Alabama. Having Simon take ownership of either super-regional Bel Air Mall or the Eastern Shore Centre lifestyle center would be great.

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  17. From http://www.indy.com

    Experts: Retailers needn’t fear Simon deal
    Indy-based mall giant would get even bigger but likely couldn’t exploit position, analysts say
    By Jeff Swiatek and Dana Hunsinger

    If Simon Property Group succeeds in its bold $10 billion play for bankrupt rival General Growth Properties, the combination of the nation’s two largest shopping mall companies wouldn’t necessarily be a scary thing for retailers and smaller competitors, some retail experts say.

    Although the combined company would control a third of the nation’s malls, it still could be hard-pressed to dictate rents and other terms to tenants, given all the selling options open to retailers.

    The fear that Simon’s proposal will create a colossus of a landlord, never before seen in U.S. retailing, was raised by a few retailers and retail brokers after Simon’s announcement Tuesday that it wants to buy General Growth.
    It’s not hard to see why. The combined company would control half of the nation’s best-performing malls, a scenario that might allow it to exploit its enhanced position to raise rents and extract other concessions from mall-dependent retailers.

    “If everybody’s owned by the same company, it gets to the point where it’s almost a monopoly,” said Megan Stacker, owner of Just Dogs Gourmet in Indianapolis’ Simon-owned Castleton Square Mall. “They set their rates, and if you don’t like it, too bad.”

    But a number of retail experts see little to fear from a Simon-General Growth pairing — and much to like.

    “General Growth, being in such trouble, I’m sure retailers are not wanting to have that kind of uncertainty about what’s going to happen with the malls they are in,” said retail analyst Britt Beemer, president of America’s Research Group. “From that perspective, retailers would love to have anybody come in that has the finances to take care of the facilities.”

    While the Simon bid to acquire its largest rival is a growth move, it’s also a survival strategy to consolidate ownership of some of the nation’s best retail properties in an attempt to stave off the assault being waged on brick-and-mortar retailers from Internet sellers, who enjoy a pricing advantage of not charging sales taxes on products sold online.

    Internet sales account for about 9 percent of total U.S. retail sales, and they’re rising by about a percentage point a year, said Richard Feinberg, a retail professor at Purdue University.

    “There is competition between malls and the Internet, and the Internet is going to continue to eat away (at the malls’ share),” he said.

    Feinberg doesn’t think that a Simon-General Growth deal would face a successful antitrust challenge in the courts.

    “I have no doubt the legal division of Simon looked at this issue before the bid was made and concluded there is nothing there,” he said.

    Simon Chairman and CEO David Simon cited Internet sales and competition from countless smaller developers when he was asked, during a recent investor teleconference, about possible antitrust violations facing a Simon-General Growth merger.

    “Retail real estate is very diverse. There is a lot of it out here. Retailers have lots of options (to do business),” he said, including over the Internet.

    Thomas McGowan, president of Kite Realty Group of Indianapolis, said local and regional retail developers such as his company need large mall operators like Simon to be successful, because they feed off traffic to the large malls.

    A Simon-General Growth combination, he said, “provides a great sense of stability throughout the retail market. I see it as completely positive.”

    McGowan cited Kite’s 2008 purchase of River’s Edge retail center near the Simon-owned Fashion Mall on Indianapolis’ Northeastside as an example. Kite plans to renovate the 115,000-square-foot center this year, something it likely wouldn’t do if the Fashion Mall’s financial future were uncertain, he said.

    Jim Sullivan, a retail analyst for Green Street Advisers in Newport Beach, Calif., said a Simon takeover of General Growth would “move the pendulum in favor of Simon” in tenant rent negotiations. But Simon “can only press so hard in terms of rent,” he said, before the tenant would decide to move elsewhere.

    The Nordstrom department store chain, which has dozens of locations with both Simon and General Growth, said it sees the possible deal as a nonissue.

    “They are both great to work with,” said spokesman Colin Johnson. “We really don’t expect it to impact us. We are continuing to operate and plan our stores just as before.””

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  18. Simon puts lease plans on their website, General Growth does not. Thus, I think Simon should take over GGP.

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    SP Reply:

    @superstar, Yes,totally agree.My only beef is that they don’t update them a lot–the one’s they have up now are from Aug/sept/oct (at least the malls i view)

    GGP used to have lease plans on their website. I remember they had one for the providence place mall,but they took them down–the PPM’s website(and most GGP)websites are ugly and arn’t very good.

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  19. I love Simon’s lease plans way better than GGP, theirs look really crummy looking with plain square anchor stores, those are the best directories, the problem with GGP is that they don’t have paper directories at some malls they own I’ve been to while Simon does.

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  20. GGP is free from Simon’s influence!

    http://blog.retailtrafficmag.com/retail_traffic_court/2010/05/07/ggp-wins-court-approval-of-brookfield-bid-simon-withdraws/

    Rejoice!!

    [Reply]

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