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Updated at 10:28 AM

That didn’t take long. After all the “Will they or won’t they?” speculation surrounding Simon Property Group’s bid for General Growth Properties that’s been circulating around the last couple of days, the REIT has made its intentions clear.

Simon now wants to supplant Brookfield’s place in GGP’s recapitalization. It claims its offer is superior to Brookfield’s for several reasons including that it would not seek any warrants. It would also agree to limits on its governance rights. It says it would welcome working with Fairholme and Pershing Square if those investors too would forego any claims on warrants.

The other nugget here is that Paulson & Co. has officially entered the fray as it is willing to provide a $1 billion co-investment as part of Simon’s offer.

However, at the end of the letter, Simon does add that, “If you are interested, we remain prepared to discuss with you instead an acquisition of GGP in a fully-financed transaction.”

Update: The Wall Street Journal does a good job explaining the implications of dropping the warrants.

Thus, the Simon offer is a gamble that the Brookfield group will walk away from the deal absent the warrants.

The warrants are critical because they represent a significant cost for any acquirer of General Growth later in the process. The warrants are guaranteed to the Brookfield group if U.S. Bankruptcy Judge Allan Gropper grants the Brookfield bid “stalking horse” status, making it the bid that others must top. He is slated to make that determination at an April 29 hearing.

Thereafter, any company that subsequently buys General Growth and unseats the Brookfield group must pay an estimated hundreds of millions of dollars to retire the warrants.

Simon’s representatives have said Simon is unlikely to continue to participate in the bidding process if the Brookfield group, rather than Simon, wins the stalking-horse designation.

Here’s the text of Simon’s release. Read the rest of this entry »