The Work

August 19, 2010 1:51 PM

Blackstone Taps Simpson for General Growth Investment

Posted by Brian Baxter

Just six months ago, Simpson Thacher & Bartlett advised The Blackstone Group on an unsuccessful $10 billion joint bid for bankrupt General Growth Properties. Now the firm is representing its longtime private equity client on a $500 million investment in General Growth, the nation's second-largest shopping mall owner and operator.

General Growth disclosed the Blackstone investment in an 8-K filed with the SEC on Wednesday, according to The Associated Press. Blackstone will purchase $500 million in General Growth shares once the Chicago-based real estate investment trust emerges from Chapter 11 protection, which is expected to happen later this year.

Simpson advised Blackstone earlier this year when it partnered with Simon Property Group, the largest owner of shopping malls in the U.S., for an unsolicited bid for its bankrupt rival, which owns high-profile retail outlets like New York City's South Street Seaport, Chicago's Water Tower Place, and Boston's Faneuil Hall Marketplace.

Wachtell, Lipton, Rosen & Katz represented Simon on its bankruptcy takeover battle for General Growth, which ended in early May after an agreement was reached to allow General Growth to partner with Toronto-based property and infrastructure investor Brookfield Asset Management on an $8.5 billion reorganization plan.

The 8-K filed by General Growth on Wednesday details an amended version of that restructuring plan. Brookfield and its partners--fund manager Fairholme Capital Management and hedge fund Pershing Square Capital Management--will provide the financing for General Growth to emerge from bankruptcy as two separate companies. (Willkie Farr & Gallagher is advising Brookfield, while Sullivan & Cromwell is representing Fairholme and Pershing.)

Under the terms of the agreement between Blackstone and General Growth, the private equity firm will put up $500 million for stakes in both postbankruptcy General Growth entities. Simpson M&A partner Brian Stadler, bankruptcy partner Sandeep Qusba, real estate partner Sasan Mehrara, and tax partner John Hart are advising Blackstone on its investment in the bankrupt mall operator.

Earlier this year Stadler and Mehrara led a Simpson team representing Hilton Worldwide, the hotel chain owned by Blackstone and its affiliates, on the restructuring of $4 billion in debt. A week ago, Simpson lawyers also advised Blackstone on its $4.7 billion acquisition of Houston-based energy company Dynegy.

Weil, Gotshal & Manges and Kirkland & Ellis are advising General Growth in its bankruptcy case, which is the largest by a real estate company in U.S. history. Last week General Growth disclosed in a quarterly report that the SEC was conducting an insider trading investigation of several current and former directors and officers.


Related Stories:

Wachtell Tapped for $10 Billion Real Estate Buyout

General Growth Wants to Split Itself in Two

S&C Joins General Growth Fray

Wachtell and Paul Weiss Advise on New Bid for Bankrupt General Growth

Court Agreement Ends GGP Bankruptcy Bid Battle

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