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Simon Property Group made what it called its best and final offer last night–a $20 per share bid for General Growth Properties. But it appears it’s not enough as GGP is reportedly still leaning towards recommending that the bankruptcy court should approve a recapitalization bid fueled by Canadian giant Brookfield Asset Management in a hearing that will take place today. If that happens, Brookfield will attain “stalking horse” status. Simon will continue to be able to bid, but it likely won’t because Brookfield and its partners would control millions of warrants, meaning that at any company that subsequently acquires General Growth must pay the Brookfield group to eliminate those warrants at a cost estimated in the hundreds of millions of dollars.

General Growth believes that court approval of the Brookfield-led bid would protect its downside and give it greater flexibility in negotiating with Simon, which has bid $6.5 billion for all of the company, the source said.

General Growth understands, however, that the warrants, which are worth several hundred million dollars, would make a competing bid more expensive and so it would be willing to negotiate with Simon on a price that adjusts for them, the source said.

The investment gives General Growth room to negotiate around antitrust issues with Simon that could arise from a merger of the two largest U.S. mall owners, the source said.

The source declined to be named because the talks are not public.

A key detail in what led General Growth to favor Brookfield’s offer was a concession by Pershing Square Capital Managment. The Journal piece described it like this:

Swinging General Growth’s decision in the Brookfield group’s favor for the time being was a pledge by one of the Brookfield partners, Pershing Square Capital Management LP, to delay receiving its 17 million General Growth warrants until the Brookfield deal were to close. Brookfield and its other partner, Fairholme Capital Management, still will receive 40% of their 103 million warrants as soon as the bid wins stalking-horse status, with the remainder vesting over the coming months.

With that move, Pershing Chief Executive William Ackman is gambling that either Brookfield’s proposal will prevail and he will eventually receive the warrants or that Simon will come back with a significantly higher offer price. Pershing controls roughly 25% of General Growth’s shares.

“GGP’s bankruptcy is one of the most successful in history,” Mr. Ackman wrote in a letter to General Growth’s board on Friday. “For GGP to hand over its keys to its main competitor subject to government approval is reckless in our view. Simon has as much, if not more, to gain from the destruction of General Growth than from its acquisition.”