Simon’s General Growth plan ‘crazy,’ fund manager says

Simon Property Group Inc.’s bid to invest in General Growth Properties Inc. would give the largest U.S. mall owner
too much control over its biggest competitor, said fund manager Bruce Berkowitz, who’s backing a rival plan.

Simon CEO David Simon, spurned in his takeover attempt of General Growth, last week offered to invest $2.5 billion in a reorganization
of the bankrupt company and match the terms of a plan by Brookfield Asset Management Inc., Pershing Square Capital Management
LP and Berkowitz’s Fairholme Capital Management LLC, the biggest debt holder. Berkowitz said he won’t participate
in Simon’s new proposal.

“It is crazy,” Berkowitz said in an April 16 interview at Fairholme’s Miami headquarters. “David
is going to take a piece and he is going to be quiet? He is going to be a nonparticipating, passive shareholder? How will
the big chains feel if they feel someone has their hand in both pieces? What is the competitive aspect of that?”

General Growth has interests in or manages more than 200 regional shopping malls in 43 U.S. states. Simon owns or has stakes
in 381 properties in North America, Europe and Asia. It offered $10 billion to purchase its rival in February, a bid that
General Growth dismissed as too low.

Simon, based in Indianapolis, would put controls in place under its new plan to ensure that General Growth remains independent
and “obviate any possible concern about Simon exercising inappropriate or unreasonable influence,” David Simon
wrote in an April 14 letter to General Growth CEO Adam Metz.

"It doesn’t compute,” Berkowitz said. Should Simon’s plan go forward, “you have one company
that is the only game in town in many locations around the U.S. I would not want it. It is not healthy for competition. I
don’t see how that, if you play it out to its logical conclusion, I don’t see a happy ending for all stakeholders.”

Simon Property said Monday in a statement that it is committed to keeping General Growth as a separate entity, and that any
General Growth board members it designates wouldn’t be Simon affiliates.

Simon’s “sole interest would be in maximizing the value of its investment, which aligns its interests with that
of all General Growth shareholders,” the company said in the e-mailed statement.

David Keating, a spokesman for Chicago-based General Growth, declined to comment.

David Simon has said that retail real estate in the U.S. is too fragmented to cause any antitrust issues even if Simon were
to buy General Growth outright. Simon said last week it is still interested in taking over the company completely after its
original bid was dismissed as too low.

Simon said its new proposal is better for General Growth shareholders than the Brookfield plan because it doesn’t include
issuing stock warrants that may dilute stock value. The warrants’ removal would provide shareholders a benefit of at
least $895 million, or $2.75 a share, Simon said. General Growth puts their value at about $519 million.

“SPG’s willingness to make its bid without any expensive warrants or similar payments makes SPG’s proposal
substantially more valuable to GGP’s shareholders,” Simon said in today’s statement. “SPG is confident
it will partner with co-investors that will be more than willing to invest in the future prospects of General Growth without
gaining such advantages.”

Simon has offered to add Pershing Square and Fairholme to his bid, as long as they forgo their warrants. Berkowitz said doing
so wouldn’t make sense for him.

“That is the deal we signed up for. We are going to get warrants,” Berkowitz said. “I can’t make
a commitment of almost $3 billion for our shareholders without being paid for that — without some form of compensation for
that.”

General Growth last month asked the U.S. Bankruptcy Court in Manhattan for approval to reorganize with a $6.55 billion investment
from Brookfield, Fairholme and Pershing Square that will give the three investors a 65-percent stake in the second-largest
U.S. mall owner. A hearing is scheduled for April 29.

Pershing Square, led by William Ackman, is General Growth’s biggest equity investor, with a 25-percent economic interest,
including 7.5 percent of its shares. Fairholme is the largest creditor, with about $1.83 billion of General Growth’s
unsecured debt, Berkowitz and Ackman said in a letter filed March 9 with the U.S. Securities and Exchange Commission.

General Growth would emerge from bankruptcy as an independent company under both the Brookfield plan and Simon’s new
offer. The mall owner filed the largest real estate bankruptcy in U.S. history a year ago after amassing $27 billion in debt
making acquisitions. Its properties include New York’s South Street Seaport, Boston’s Faneuil Hall and the Grand
Canal Shoppes and Fashion Show in Las Vegas.