GGP IS NOT DEAD YET

Implications: WSJ is indicating that GGP is all but dead and buried. I disagree! After closely following this company from its' earliest beginnings, I can attest to their basic conservatism and good business sense. The only exception was when they got caught up in the feeding frenzy and overbid in the auction  for the Rouse Company. Except for the Rouse acquisition, this is a very healthy company. 

Analysis: There is a very easy method for determining the "real, intrinsic, & current" value of GGP. I am convinced that if anyone took the time and effort to analyze the Rouse deal they could have the key to understanding the entire GGP company. Here's how it works.

First divide the $12+ billion acquisition into two parts. The first part is what they overpaid for the Rouse shopping center portfolio. This can be arrived at by looking at the average value per sq. ft. of the Simon and Taubman mall portfolio. Assume this is what GGP should have paid for Rouse's malls.

Next, assume everything above that amount is allocated to the Rouse residential land holdings which they said they were going to sell off but were reportedly talked into keeping by their recently departed CFO. Now discount that number down to 22 cents on the dollar which is the discounted price at which the major western home builders are selling their land
 inventory.
 
Now again look at the average price per owned sq. ft. the Simon and Taubman Companies are valued at in the current market. Apply that same price to the GGP owned mall sq. ft. and add back the 22% of book value of Rouse land holdings and you have a very good indicator of how the current market should be looking at the "real" value of GGP.

A friend of mine recently did this calculation and came up with a stock price of approximately $25 per share. I agree.