I am here to weigh in on the increasingly popular marketing battle over GGP's (General Growth Properties) value in, and out of bankruptcy. The players in question are large buyside institutions who own opposing positions on the stock. Ackman/Pershing square, who are long the company's stock, and Hovde Capital Advisors, who are short the stock, and Reggie Middleton, the original player!
For those who follow me regularly and are familiar with my dealings with GGP, skip down to the bottom of this post to download my latest GGP analysis. For those who are not familiar with me and the BoomBustBlog, I am (to the extent of my knowledge) the first investor/media concern to go public with a short thesis on General Growth Properties (GGP) with a warning on commercial property in general, and a specific short on GGP in the 4th quarter of 2007 (see "GGP and the type of investigative analysis you will not get from your brokerage house", BoomBustBlog professional subscribers can download the entire GGP composite history in .pdf format). I am a private investor that generates his own proprietary research. It is solid, independent, unbiased, and of extreme quality when compared to the highly conflicted sell side marketing fluff proffered as research, and apparently now stands out among the buy side as well. With all due respect to the successful investors referred to herein, there is a hint of "talking one's book" within the presentations. I have absolutely no problem with self promotion, but when it appears the promotion comes to odds with the validity of the analysis, it does tend to raise my brow, and apparently the brow of several institutions that have come to me for my opinion.
So, let's take an unbiased, empirical look at GGP from the guy who first pointed out the insolvency of this company in the first place. As for the self promotion aspect, I am now offering consulting services to those who desire independent, objective analysis. I will soon be releasing a very interesting study on real estate funds and residential mortgage related products from Morgan Stanley and Goldman Sachs, which will assuredly cause their clients to fall in love with them. More on that later, though.
GGP from the beginning
As stated earlier, I articulated a roadmap to the largest commercial real estate failure in history a full year in advance of its filing. General Growth Properties was picked to be the big BoomBustBlog.com shorting opportunity in November 2007, when it was the 2nd largest commercial mall owner in the country, trading above $50, with an investment grade rating and buy recommendations from Wall Street. It filed for bankruptcy a year and a half later.
The following links lead to an extraordinary body of GGP and CRE research which I released through BoomBustBlog.
• The Commercial Real Estate Crash Cometh, and I know who is leading the way! 06 January 2008
• Generally Negative Growth in General Growth Properties - GGP Part II 08 January 2008
• General Growth Properties & the Commercial Real Estate Crash, pt III - The Story Gets Worse - 09 January 2008
• More on GGP: A Granular View of Insider Selling and Lease Rate Growth 11 January 2008
• GGP part 5 - The Comprehensive Analysis is finally here 19 January 2008
• My Response to the GGP Press Release, which seems to respond to blogs... 21 January 2008
• For those who were wondering what sparked that silly press release from GGP. 22 January 2008
• GGP: Foreclosure vs Asset Sale 25 January 2008
• GGP Refinancing Sensitivity Analysis 25 January 2008
• GGP part 7 - Share value under the foreclosure analysis 31 January 2008
• GGP part 8 - The Final Analysis: fire sale of prime properties 02 February 2008
• GGP Conference Call 14 February 2008
• Reader's legal observation on GGP 16 March 2008
• Analysis of GGP's recent Q1 results 29 April 2008
• GGP Can't Afford its Dividend 06 May 2008
• Press release announcing new equity financing - 21 March 2008 something that I didn't explicitly model in my own analysis, but after reviewing information without the benefit of official documentation, there were no surprise nonetheless... 26 March 2008
• We did find some surprises, and my blog readers chimed in with their expertise and opinions...
12 April 2008
Our approach is to evaluate the total credit risk attached to the CRE portfolio by
1. Following a bottom up approach wherein each individual property is valued based on current cap rates and prevailing rentals;
2. Comparing the fair value of each property with outstanding mortgage to identify the pockets with high LTV, which can lead to losses on liquidation,
3. Factoring in the refinancing risk arising from short-to-medium term scheduled maturities.
The comparative analysis (Reggie vs Ackman vs Hovde) is available to the public here: 
Middleton vs Ackman vs Hovde on GGP - public edition 2009-12-26 20:41:50 1.50 Mb. The full comparative analysis with updated valuation is available to subscribers here: Middleton vs Ackman vs Hovde on GGP - subscription edition w. updated valuation 2009-12-26 20:43:17 1.51 Mb. You may click here to subscribe.
