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Mall owner rejects $10B

Bankrupt General Growth elects not to sell to the owner of Del Amo center in Torrance.

February 19, 2010|By Zain Shauk

General Growth Properties, which operates the Glendale Galleria and Burbank Town Center, rejected a $10-billion bid Tuesday from rival Simon Properties Inc. that could have brought the firm out of Chapter 11 bankruptcy protection.

General Growth had considered the offer over the last week, before Simon Properties made the bid public, but in a response Tuesday said it had determined the offer was “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.”

The Chicago-based firm did leave the door open for another offer from Simon Properties. If approved, a potential purchase of General Growth would likely bring improvements to area malls, observers and experts said.

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General Growth filed for Chapter 11 bankruptcy protection a year ago as it tried to reorganize under $27 billion in debt.

The firm’s filing was reportedly the largest real estate bankruptcy in national history.

The Glendale Galleria, at 1.5 million square feet, and the Burbank Town Center, at 1.2 million square feet, are the largest retail destinations in Glendale and Burbank and would add to an already massive national portfolio for Simon Properties.

The Indianapolis-based firm owns more than 380 properties, including the Del Amo Fashion Center in Torrance, which is one of the largest shopping destinations in Los Angeles County at about 2.4 million square feet.

Simon Properties also owns the 1.4-million-square-foot Ontario Mills mall and the Promenade at Camarillo Premium Outlets.

General Growth owns or operates more than 200 properties nationwide, most of which are malls or outlet centers.

Its holdings also include the San Fernando Valley’s 1.4-million-square-foot Northridge Fashion Center.

Although the bankruptcy filings have not affected the local shopping centers, the proposed acquisition could lead to improvements and new tenants at the malls, which may be less likely as they run under an operator dealing with bankruptcy proceedings, observers and experts said.

“What we’ve seen over the last couple of years is they just kind of stopped putting anything back into the properties,” Bruce Ackerman, president and chief executive of the Valley Economic Alliance, said of General Growth.

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