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GGP exec rebuts ‘pure speculation’ about SoNo Collection

The SoNo Collection under construction, as seen recently from the top of Oyster Shell Park.

NORWALK, Conn. — Nothing is changing with The SoNo Collection, Mayor Harry Rilling said.

Leaders of GGP, the developer of the mall dubbed “The SoNo Collection” now under construction on West Avenue, have agreed to a buyout proposed by Brookfield Property Partners L.P. GGP exec Kevin Berry on Wednesday clarified that “Brookfield has proposed to acquire the shares of GGP it does not already own,” which is about 34 percent of GGP stock. “The proposal is subject to a shareholder vote that will likely occur sometime in the 3rd quarter of 2018. Shareholders must approve the proposal in order for it to close,” he said.

The SoNo Collection is being built on the last parcels of the Reed Putnam Redevelopment Plan. As such, GGP had to go through a lengthy process to get the parcels’ Land Disposition Agreement (LDA) changed to allow retail as the dominant use.

When news of the deal broke, some NancyOnNorwalk readers wrote comments on NoN alleging that Brookfield will walk all over Norwalk.

“as the fog lifts the new owner of the project will propose the newest ‘vision for Norwalk’ including re-locating the aquarium to the site and the save all idea of a casino will finally emerge,” Oldsalt wrote. “Excuses will include: no one builds malls anymore, Do you want the casino to go to Bridgeport? We have already started, do you want us to stop? and my favorite ’ we will need additional accommodations from the City and State to bring this tremendous opportunity to Norwalk.”

“Here we go again. Another POKO,” McKeen Shanogg said, referring to a stalled development on Wall Street.

Berry said he’s “not sure where that even would have come from, besides pure speculation.”

“The decision to launch and develop SoNo was approved and made at the GGP Board level, which is comprised of nine individuals, three of which are with Brookfield,” Berry wrote.

“There is no change to the day to day operations of SoNo,” he wrote.

“Brookfield currently owns 35% of GGP,” Rilling wrote. “They will now be owning a controlling share. Brookfield as a major stockholder, is and has been, totally aware of all aspects of this project.  Nothing is changing and we will be dealing with the same people with whom we are currently dealing.  Brookfield is keeping GGP involved in building and running the SoNo Collection. This has no affect on the LDA, the anchors, or any other conditions.”

Attorney Eric Bernheim, who was hired by the city as a consultant to deal with GGP issues, on Thursday wrote, “The City of Norwalk is not aware of any changes to the approved development plan.  The City anticipates that the project will continue uninterrupted and we look forward to an opening on the scheduled October 2019 target date.  We do not believe the language in the Land Disposition Agreement (‘LDA’) prohibits the sale of publicly traded GGP stock.  We have requested additional details from GGP regarding this transaction so we can be certain that they remain in full compliance with the terms of the LDA.  We are not aware of any request to modify the terms to the approved LDA.”

7 comments

Debora Goldstein March 30, 2018 at 12:53 pm

While the LDA revisions were being contemplated, I raised the issue of whether there were conditions being placed on a “change in control”, which this absolutely is.

The legal premise is whether the agreements in place permit a change in control to a successor organization, with some or no approval by the counterparties (Redevelopment AND the City of Norwalk).

That’s the legal issue–NOT sale of public stock. If the change of control requires Norwalk’s consent, then there is leverage to ensure that Brookfield doesn’t come back for more modifications (or even to sell the SoNo Collection to another operator). Let’s hope counsel took care of that.

Donna Smirniotopoulos March 30, 2018 at 5:08 pm

@Rick, thanks for posting that link to the Norwalk Chamber Real Estate Outlook Forum. Did you know Halloran & Sage, who are moderating, were also retained as outside counsel on the Firetree lawsuit?

@Deb, how can we determine if anchors and other tenants have provisions in their leases that might allow them to back out under new management or if the anchor they tied their sales to files chapter 11 or becomes something else—an entertainment concept?

Rick March 31, 2018 at 1:32 pm

Lets go back to breaking story on May 2 2017

https://www.nancyonnorwalk.com/2017/05/ggp-exec-answers-questions-as-national-news-swirls-around-company/

Our mayor seems passive about whats next for the mall, investors are not so sure this mall deal is the best one on the table.Some say as much as $11 dollars per stock short of the goal.

This is what type of news coming in on an hourly basis to the investors

https://www.law.com/legalnewswire/news.php?id=604563

This is not the time to sit back and trust a city hall notorious for playing games with its taxpayers.

One thing that was asked from insiders is how much stock was offered to Norwalk and if so how much did they buy if at all? Follow their malls and the cities that host them for additional proof it happens, would Norwalk be that gullible with that type of investment ? If yes it could tear holes in any agreement with the city.

@Debora I hope your right,,, others who are in the the loop said you have asked a very serious question that was passed on, one comment was Debora has a valid point that needs an answer.

Another comment was Simon is also challenging the sale , if they do and start a bidding war it could land in court in Delaware and could put a hold on the mall ownership.They don’t want a mall there they would be protecting The Westchester a 890,000-square-foot, shopping mall and Clinton Crossing among many others nearby.

Consultants said that the GGP hotel would have generated $300,000 in taxes every year, and the first seven years of real estate tax would have been abated 50 percent,

This was before MGM was in the Fairfield picture now all bets are off this may be a game changer, Bear in mind the hotel was scrapped within 48 hours of GGP meeting with Trump over a year ago.

count the cranes if they start leaving the site it could cause delays and push for modifications the city seems to have very little leverage on at this point. Yesterday Bay crane was taking stabilizer bars and weights away on flatbeds, find a crane guy to tell you what that means.

Rick March 31, 2018 at 1:38 pm

this was Fridays posting on GGP stock

Open
20.69
High
20.82
Low
20.45
Mkt cap
19.58B
P/E ratio
30.78
Div yield
4.30%

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