There is no question in my mind that David Simon would still pay the highest price to buy these assets.
There is also no question in my mind that as we speak today, John Bucksbaum and the GGP Management team will not let that happen and they are supported in that position by Ackman and Berkowitz.
As long as that support remains, SPG is on the outside looking in.
However, SPG will be in the mall business forever. Ackman and Berkowitz are only here because they beleive there is an opportunity for them to make money. As long as they beleive that, they will stay.
Once they begin to change their opinion, they will be gone, and they will sell out to the highest bidder (and guess who will be sitting there waiting).
I don't expect anything to happen with these Hedgies until the Company is out of BK, the split between GGP/GGO is complete and the business operations are stable. That may not be until 2Q2011.
At that time if the stock price has not improved or the short term outlook is not good, these Hedgies could begin to lose patience with the Management Team and rethink their positions.
I am NOT saying that this will happen. I am only saying it could happen. (Especially if our economy goes into a double dip this fall and retail spending goes in the ash can).
SPG is a long term mall player.
Ack and Berkie are short term Opportunistic investors.
The status quo will not remain for a long time. The mall business is a mature business and once GGP stabilzes, there isn't much sizzle left for Hedge funds.
SPG may be out of the game for now, but that could change down the road.
Enjoy the ride, it has been and will be fun!
SGOLD, thanks for the post. If the GGP share price goes to $30.00, then the dividend will also rise.
Even at $30 I would only sell about 20% of my shares.
Looking forward to a great dividend based on my cost.
Good luck to you.
Bingo, Big Red, you hit the nail on the head.
Now please thunk MCM on his head and rattle for the better that one solitary brain cell he has trying to power his brain!
Not up to the task of zonking MCM on the melon?
Ah well, MCM's kind of stupid can't be fixed anyway!
Yes, unless we find out that GGP with its clawback provision and potential debt reinstatement manages to exit BK with significantly less shares outstanding than we now anticipate, thus bolstering FFO per share, and a resulting comp to peer REITS FFO multiples shows the value of GGP to be $36...then you will hold for fair value if that's where you see fair value!
your thought process ignores the single biggest economic criteria: opportunity cost.
hypothetically, lets say the business of GGP doesnt change, and all of a sudden, GGP shares surge to $100, and the dividend stays the same. would he sell then?
If you say yes, then your arguement for not selling at $25 is invalid as well, for the same reason.
It's only about current price as it relates to intrinsic value, and what can be done with the money in other situations (opportunity costs). If Ackman, or anyone else for that matter, feels that the current price adequately reflects or exceeds current intrinsic value, and he has other ideas which are mispriced into which he can put his capital, he will sell. The decision has absolutely nothing to do with the dividend yeild as it relates to purchase price.
Until Matthew dies and the remainder of the Bucksbaum family becomes minority shareholders you'll never see a willing sale of GGP to _anyone_, but especially not to their number one competitor.
Once the Co exits BK and the new shares are issued the B Family position gets diluted to something like 8%. They will have lost most of their influence and it will be the Hedgies led by Ack and Berkie who will be calling the shots.
And as of now, it doesn't seem as though they want any part of SPG either.
But that can change down the road.
No, SGold, you are incorrect. Simply put, GGP is NOT a discounted bond. Once Ackman believes GGP has reached full value and/or there are better total return opportunities available for his fund, he will sell GGP.