Even if you are not familiar with Real Estate Investment Trusts (REITs), commercial real estate or the stock market, you are probably familiar with Simon Property Group. This is because Simon is also known as the main owner of the ubiquitous malls dotting the suburban landscape from sea to shining sea. Today, it also gained attention as one of the reasons for a higher stock market.
One notable result of the recent economic troubles has been a dramatic slowdown in M&A activity as companies have found easy financing harder to come by and as they avoid taking on the risk and debt necessary to complete deals. However, today Simon offered to rescue beleaguered General Growth Properties in a $10 billion deal which includes the settlement of certain of GGPs debts. The deal, subject to judicial and shareholder approval, would allow General Growth to avoid bankruptcy.
Simon is a strong company despite the economic downturn, and this proposal represents a canny attempt to buy assets at a discount. It is also a sign that financing might be loosening up and that the nation's premier retail REIT believes better times are ahead. If Simon is right, it could be good not only for its shareholders, but for the whole economy.
No comments:
Post a Comment