Simon hires Lazard for General Growth bid: sources

David E. Simon, chairman and chief executive of Simon Property Group Inc., speaks at a panel discussion ''Retail and the Changing Consumer: Where People Will Spend'' at the 2009 Milken Institute Global Conference in Beverly Hills, California April 27, 2009.

NEW YORK (Reuters) - Mall firm Simon Property Group Inc (SPG.N) has hired investment adviser Lazard Ltd and law firm Wachtell Lipton Rosen & Krantz to help it explore a possible bid for all or part of bankrupt rival General Growth Properties Inc GGWPQ.PK, according to people familiar with the matter.

Simon has held discussions with some of General Growth's creditor groups and has the ability to put some capital into the company, one of these people said. The people asked not to be named because the talks are not public.

General Growth, which filed for bankruptcy protection in April, is in the process of negotiating a stand-alone bankruptcy reorganization plan with its lenders and has the exclusive right to come up with its own plan through late February.

Simon is trying to come up with a strategy to do the deal, discussing various options for how to make a bid and a deal may not happen, these people said.

Lazard declined to comment.

General Growth, the second-largest U.S. mall owner and biggest real estate failure in U.S. history, has underscored the difficulties in the U.S. commercial real estate market, where there are now few sources of available funding amid the credit crisis. The retail real estate sector has been particularly hit hard due to falling rent and rising vacancies because of the U.S. recession and consumer pullback in spending.

Chicago-based General Growth owns or controls more than 200 regional malls, including valuable properties like South Street Seaport in New York, Fashion Show in Las Vegas and Faneuil Hall Marketplace in Boston.

Simon, the largest U.S. mall owner and largest U.S. real estate investment trust, has long been touted as a possible buyer for General Growth. David Simon said earlier this year that his company would consider property purchases or an acquisition of an entire REIT. Simon had access to about $6.3 billion in cash in August.

The case is In re: General Growth Properties Inc, U.S. Bankruptcy Court, Southern District of New York, No. 09-11977.

(Reporting by Emily Chasan and Paritosh Bansal, additional reporting by Megan Davies; Editing Bernard Orr)