General Growth Properties GGP
At $14, GGP implicitly prices spinco GGO at negative $1; PF GGP alone merits ~$15 on Simon's 6.6% peer cap rate, pointing to ~$20 combined intrinsic and ~43% upside by year-end emergence.
Thesis
Pershing's 2009 Ira Sohn thesis on GGP has played out: the stock is up more than 1,000% from $1.19 to $14, property-level creditors are getting a 6.5-year extension at 5.07%, and the Brookfield/Fairholme/Pershing-backed recapitalization will pay unsecureds in full. The update argues the rally isn't over. Post-emergence, PF GGP — ~200 class-A regional malls with $2.3bn LTM cash NOI, 78% non-recourse debt, and industry-leading $424 sales-per-square-foot — still trades at an ~8% implied cap rate versus 6.6% for Simon, leaving ~$15/share of intrinsic value. Spinco GGO, holding Summerlin, Woodlands, South Street Seaport, and marquee development land, adds ~$5/share. Combined fair value is ~$20, implying ~43% upside by year-end emergence, with GGO effectively thrown in for negative $1.
SCQA
GGP is America's second-largest mall REIT — ~200 class-A regional malls and $2.3bn LTM cash NOI — that filed Chapter 11 in 2009 with its stock at $1.19, when the market assumed equity would be wiped out.
Despite Pershing's 2009 plan working — creditors paid in full, stock up 1,000% to $14 — GGP still trades at an 8% implied cap rate versus 6.6% at Simon, a gap driven by bankruptcy-driven index exclusion, not economics.
Support the Brookfield/Fairholme/Pershing-backed plan of reorganization, emerge as two public companies (PF GGP the mall REIT and GGO the development spin), and participate in the IPO-style equity raise at $15/share.
PF GGP's $2.3bn NOI at Simon-equivalent cap rates implies ~$15/share; GGO adds ~$5; combined intrinsic value is ~$20 versus today's $14, implying ~43% upside by year-end emergence with GGO effectively free.
The three reasons
- 1
PF GGP's $2.3bn NOI at Simon's 6.6% peer cap rate supports ~$15/share — alone above today's $14
- 2
GGO (Summerlin, Woodlands, South Street Seaport) adds ~$5/share, implicitly priced at negative $1
- 3
Post-emergence re-indexing drives ~$9bn of forced REIT demand against a ~$3.8bn IPO supply
Primary demands
- Back the Brookfield / Fairholme / Pershing Square plan of reorganization, paying unsecured creditors in full and preserving equity
- Emerge GGP as two public companies: PF GGP (class-A mall REIT) and GGO (master-planned communities and development assets)
- Transfer 13 underperforming 'Special Consideration Properties' to lenders to upgrade portfolio quality
KPIs cited
Pattern membership
Precedents cited
- Pershing Square's own 2009 Ira Sohn thesis 'The Buck's Rebound Begins Here' on GGP
Composition what's on the 89 slides
Slide gallery ·
Notes
Delivered at the 2010 Ira Sohn Conference as 'Part II' to Ackman's 2009 'Buck's Rebound Begins Here' GGP pitch. Hybrid victory-lap + forward-thesis structure: first ~40% recaps the 2009 bankruptcy call playing out (stock +1,000%, creditors paid in full); remainder pivots to the post-emergence sum-of-parts opportunity (PF GGP ~$15 + GGO ~$5 = ~$20 vs $14 price). Strong before/after spine — explicit 'A Little Context...' section (pp.8-22) resolves into 'The World has Improved Dramatically' checklist (p.23). Memorable rhetorical devices: 'a mall is like a trust holding a portfolio of bonds' analogy; four-slide non-recourse-vs-recourse leverage teaching walkthrough with a 'Mr. Bill' clown 'OHH NOOO!!!' image when recourse equity gets wiped out — rare visual humor for a Pershing deck. Simon Crossholdings slide (p.39) is the rhetorical peak: top 25 REIT holders own ~60% of peer REITs but <1% of GGP, implying $9bn of forced demand. Closes with Steve Jobs-style 'And one more thing...' surprise reveal of a new ~150mm-share Citigroup position (p.68) and a plug for Christine Richard's book on Ackman's MBIA battle. No villain — constructive/analytical throughout; Simon/GGP management quotes are used supportively, not as contradiction. Stake in GGP not disclosed as a % in this document, though 190mm clawback shares for Pershing+Fairholme combined are referenced.