Chicago-based General Growth rejected an earlier $10-billion bid from Simon, the nation’s largest mall operator, because it was too low, the firm said.
With the filing, company Chief Executive Adam Metz hinted in a statement that he was looking forward to higher offers because the firm’s new plan would allow it to restructure on its own “while providing [General Growth Properties] with the flexibility to explore even better alternatives for an emergence transaction.”
The filing is expected to not only set the stage for ending the company’s bankruptcy, but also to put the firm on a trajectory to fiscal health that could be a boon to local properties, experts said.
Although General Growth representatives have stressed that the bankruptcy has not affected the local malls, experts and observers say the company has likely been limited in its capacity to commit significant resources toward facility upgrades or luring new tenants.
“With malls you’ve got to continually be reinventing your products and they haven’t been able to do that because of the lack of resources lately,” said Bruce Ackerman, president and chief executive of the Valley Economic Alliance.
That could become problematic for the properties if they lose shoppers to more attractive destinations, he said.
“They need a refreshment,” Ackerman said of the Town Center and Galleria.
“They need to keep that brand as new and pleasing and inviting as possible because there’s so much competition out there right now.”
With properties including the local malls and the Northridge Fashion Center, General Growth’s portfolio will likely be attractive enough to draw a substantial offer, said Jack Kyser, chief economist at the Los Angeles County Economic Development Corporation.
“We have to see how serious some of these people that have made offers for General Growth are because at the end of the day they have a very, very valuable collection of shopping centers, so if they can pull it off and come out on top, that would be a coup for them,” Kyser said.
The local malls will likely be able to begin making significant changes if their operator is not under bankruptcy protection, including possibly signing on new tenants to fill major vacancies left behind by Mervyn’s at both malls.
“General Growth will probably like to see something go in there, but people would probably hesitate to do anything because of the whole uncertainty with the [bankruptcy] situation,” Kyser said.