The Talent

December 11, 2009 6:00 AM

Dealmaker of the Week: Peter Golden of Fried Frank

Posted by Matt Straquadine

Golden It's no secret that, along with everything else, big real estate deals have been scarce lately. When the credit markets locked after the fall of Lehman Bros., suddenly cash was king. And most of the players in the real estate market hadn't been saving up for that rainy day.

One exception throughout has been Simon Property Group, Inc., the largest owner of shopping malls in the U.S. "The Simon people are very good operators," says Alvin Katz, a real estate partner at Mayer Brown. "It feels like they've been piling up cash, just waiting for an opportunity."

Simon seized an opportunity Tuesday. That's when the publicly traded real estate trust announced it had reached an agreement with The Lightstone Group to buy Prime Outlets Acquisition, LLC, an operator of outlet centers across the U.S. Valued at a total $2.3 billion, including cash, stock, and debt assumption, the deal is the largest U.S. commercial real estate deal this year, according Mergermarket's data and The Wall Street Journal.

The acquisition will add a stable of 22 outlet centers to Simon's list of properties--the company will now own 63 outlet centers across the U.S., more than twice the number owned by Simon's nearest outlet competitor Tanger Factory Outlet Centers Inc., according to The Wall Street Journal.

Locking down the shopping spree for Simon was Peter Golden, a corporate partner in Fried, Frank, Harris, Shriver & Jacobson's New York office. 

Golden has led several deals for Simon in the past. In 2007, he handled Simon's acquisition, along with Farallon Capital Management, a hedge fund, of Mills Corp., another REIT, for $7.9 billion including debt. The Fried Frank lawyer worked alongside Paul Weiss partner Jeffrey Marell, counsel to Farallon, on the deal.

The two lawyers wound up across the table from each other on the Simon-Prime deal, which, according to Golden, was a plus. "[W]e were able to go into this one with a good working relationship from the start."

Marell agrees, saying that having previously worked together was an asset. He describes the negotiations as "cordial" and "productive," just as on the Mills deal.

Other lawyers watched with interest. Mayer Brown's Katz stresses that he has no inside knowledge of the deal but thinks that, "[t]his looks like a good deal for Simon, though that doesn't necessarily mean it was a bad deal for Lightstone," he says. "They may have just been ready to cash out."

Now the question is whether the tie-up will be the first of many in the commercial real estate space, or just a one-off for a cash rich company. (According to SEC filings, Simon had nearly $4 billion in cash on its balance sheet before the buy.) There is reason to believe more deals are on the way. Over the last several months, Simon has publicly acknowledged it is considering a bid for General Growth Properties, Inc., the number two mall operator behind Simon, which filed for bankruptcy in mid-April.

Analysts cited by Reuters said that Simon's purchase of Prime doesn't preclude a bid for General Growth. This is especially true considering that the company recently bolstered its impressive war chest with a new revolving credit facility that it can tap for an additional $3.57 billion. One thing we do know: Simon has retained lawyers from Wachtell, Lipton, Rosen & Katz to explore that bid, with corporate partner Adam Emmerich in the lead, as confirmed by a Wachtell spokesperson.

Though Golden wouldn't comment on Simon’s decision to appoint another firm to explore a bid for General Growth, he has nothing but praise for the company and its management.

"From a lawyer's perspective, [Simon] is a great client to have," Golden says. "The GC and CEO are able to make difficult decisions quickly and communicate those decisions clearly."

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