Natick Collection Owner Faces Dueling Offers
The ongoing bankruptcy saga playing out on the national stage for General Growth Properties, owner of the Natick Collection, is leaving many in the region feeling uneasy.
General Growth Properties of Illinois, which also operates Boston's Quincy Market, filed for Chapter 11 bankruptcy last year announcing it had $9.7 billion in debt to restructure.
After rejecting a takeover offer from competing mall giant Simon Properties, General Growth announced last week that Toronto-based Brookfield Asset Management had made a $2.65 billion equity offer, which General Growth says would bring the company back to stable financial footing.
Under terms of the proposed deal, Brookfield Asset Management would have a 30 percent stake in General Growth. The very complex deal would pay existing General Growth shareholders $15 per share. It would also split General Growth into two separate companies - one called General Growth Properties and the other, General Growth Opportunities.
General Growth seems to favor the Brookfield Asset Management offer, but there's speculation in the news media that a bidding war could be in the offing.
Local Perspective
While General Growth has insisted that operations will continue as usual at both the Natick Collection and Quincy Market, Jon Hurst, president of the Retailers Association of Massachusetts admitted that when such large corporate upheavals are happening, it can be a stressful time for retail tenants.
"This new deal (with Brookfield) just gives some comfort to the current and perspective tenants," Hurst said. "Too many retail locations, particularly this time of year, have dark stores. You need to turn those around rapidly and bring in new exciting draws. Having a strong financial owner is an important part of attracting those tenants."
The prospect of some resolution to General Growth's bankruptcy is welcome news locally.
"You don't want to see local businesses that have invested in your community not be successful," said Patrick Reffett, community development director in Natick.
The Natick Collection opened in 2008 after an expansion and renovation to the pre-existing Natick Mall. During the permit application process for the Natick Collection expansion, the town established numerous requirements, including that the developer improve traffic flows around the mall and that the town receive some funding to make additional improvements.
Reffett said there had been concern that some of the money owed to the town would be lost during a bankruptcy proceeding. But General Growth has since made all necessary payments to the town and complied with all the regulations associated with the permits.
One of those includes a $340,000 payment the town received to study traffic improvements to the North Main Street, which Reffett said is in the design phase.
The company's most recent financial statements show that General Growth lost $680 million through the third quarter of 2009. That's in stark contrast to the $23 million profit the company reported for the same period in 2008.
On Feb. 16, the company rejected a reported $10 billion takeover bid from rival mall developer Simon Properties. That deal included Simon purchasing General Growth stock at $9 per share. General Growth said it was not interested in selling the company, but rather raising capital and maintaining independence.
About a week later, General Growth announced the Brookfield Asset Management proposal.
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