Simon Property Group offers $10 billion for bankrupt General Growth

By Steve Green

Tuesday, Feb. 16, 2010 | 6:55 a.m.

Two big players in the Las Vegas economy would be united under a proposed $10 billion merger announced today.

Simon Property Group of Indianapolis, owner of the Forum Shops at Caesars, today said it's offering to buy bankrupt General Growth Properties Inc. of Chicago, developer of the Summerlin planned community and owner of five Las Vegas shopping malls. Of the $10 billion offered by Simon, about $9 billion would be paid in cash.

General Growth, weighed down by $27 billion in debt and hurt by the recession, filed for Chapter 11 bankruptcy reorganization on April 16, 2009.

Besides its extensive Summerlin land holdings, General Growth in Las Vegas owns the Fashion Show mall on the Las Vegas Strip, the Grand Canal Shoppes at the Venetian, the Shoppes at the Palazzo and the Boulevard and Meadows malls.

Simon Property Group also has two Las Vegas outlet malls: The downtown Las Vegas Premium Outlets and Las Vegas Outlet Center at 7400 Las Vegas Blvd. S. at Warm Springs Road.

General Growth had no immediate comment on the offer. The company has been moving some subsidiaries out of bankruptcy as it refinances mortgages encumbering individual properties.

It wasn't immediately clear if Simon would hold on to General Growth's land-development businesses around the country such as Summerlin. Simon is known as the nation's largest shopping mall owner and isn't known for being in the master-planned community development business.

General Growth's Summerlin holdings include some 7,400 acres of undeveloped land, a collection of office buildings, smaller retail centers and the unfinished and mothballed Summerlin Centre regional retail mall and lifestyle center.

Michael Stamer, counsel for the Official Committee of General Growth's Unsecured Creditors, said in a statement issued by Simon: "Full cash payment to all unsecured creditors and the substantial recovery for equity holders that Simon has proposed would be a great result. We fully support and encourage prompt engagement by the company with Simon."

The deal, if approved, would alter the U.S. shopping mall landscape as Simon, the No. 1 player in the industry, has 325 properties in the United States and Puerto Rico while No. 2 mall owner General Growth has more than 200 malls around the nation.