The biggest real estate bankruptcy is now a fact. To all those who have been buying equities in REITs in the past two weeks, congratulations. Once the liquidations start, those dreaded "market tests" will become a reality and will reprice the entire CRE market. Additionally, leases that become renegotiated will demonstrate just what are sustainable and viable lease rates, and the GGP weakness will undoubtedly be used by all other tenants to become much more aggressive in their negotiations with landlords.
Rouse and 165 other units are also included in the bankruptcy, however several properties that are part of JVs are not included.
In the meantime Ackman is getting even more entrenched in one side bets in real estate, providing a $375 million DIP loan to the company. His thesis that the company is worth more in bankruptcy than out, will be tested as early as today.
As an aside, only Simon Property Group, which yesterday made Goldman Sachs' conviction buy list owns more U.S. malls than GGP.
Advisory vultures for the company include the dynamic trio of Kirkland and Ellis, Miller Buckfire and AlixPartners, the former two located conveniently floors apart in the CitiCenter, yet again demonstrating the synergies of love between a bankruptcy's financial and legal advisors.
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