On Friday, the BAM plan for reorganizing GGP was approved by the court. This is a major step towards getting out of bankruptcy. The plan basically values GGP at $15 ($10 to GGP with the good assets and $5 to GGO). The market has been dejected that the Simon offer, as high as $20, was not approved. The GGP shares are currently trading at $14, I believe we have a floor of $15 from the approved plan.
In the short run I believe GGP shares will be volatile. The shares selling under $15 does not make sense to me. Although in the long run, I believe there is huge upside in the share price. Once out of bankruptcy, likely Q4 of 2010, we should see the GGP shares rebound substantially. Also the GGO assets could be a big winner. With BAM management running GGO, I think they have huge upside compared to the value of $5.
Although the short term hit that the GGP shares are taking will have a big impact on my fund, I think the future for GGP is very good. I’m happy with short term volatility as long as the long term returns will be compensate for it. In GGP, I believe the current market price does not reflect the future value.