REITs.com

General Growth vs. Simon Property Group

The credit crunch finally seems to be taking its toll on the REIT sector particularly malls, however, some groups, notably Simon Property Group, continue to expand.

General Growth, owner/manager of shopping malls across 44 states,  has seen its growth stall due to its large debt position.  Joel Bloomer of Morningstar states,

“General Growth is one of the most leveraged REITs out there,” said Bloomer. “When you combine that with what’s happening in the credit markets, it’s a perfect storm for disaster.”

Apparently, the company is looking to refinance its large loan portfolio, but is having trouble finding the financing to do so in such a tight credit market. Many analysts agree that they are in the position that they are due to paying top dollar for properties on credit and misreading retail’s future.

On the other hand, Simon Property Group is looking to expand on General Growth’s demise. Sources say they will be looking to pick up close to 200 properties at a discount.

Simon Property Group avoided the pain of the recession by not being as aggressive these past few years as General Growth and by not leveraging their balance sheet. Bottom line, in this recession, capital is king and Simon Property Group looks to be a in a position for growth with their strong cash position and little debt.

Tags: General Growth, Malls, reits, Simon Property Group   Posted in News