The company that owns most of the regional malls in Central Maryland announced Tuesday that it intends to emerge from Chapter 11 bankruptcy protection this fall as two separate entities, with some key properties in the state going to each one.
Chicago-based General Growth Properties said in a bankruptcy reorganization filing that one of the new companies, also called General Growth Properties, would contain most of the regional malls. A second, tentatively given the placeholder name of Spinco, would contain master-planned communities such as Columbia, Md., and Summerlin, Nev., and specialty marketplaces such as South Street Seaport in New York.
The new General Growth Properties portfolio, which the current company had mentioned in previous bankruptcy filings, would include Maryland developments such as Harborplace, the Gallery, the Village of Cross Keys, Mondawmin Mall, Towson Town Center, Owings Mills Mall and White Marsh Mall.
Gregory F. Hamm, Columbia's general manager and a General Growth vice president, said the Mall in Columbia, the big box Gateway Overlook center on Route 175 and a series of older office buildings south of Columbia's mall would also be property of the new General Growth. However, Merriweather Post Pavilion, General Growth's regional headquarters on Little Patuxent Parkway and other lakefront property would go to Spinco, Hamm said.
General Growth has been working with Howard County and local "stakeholders" on plans to build housing, commercial space and public amenities on undeveloped parcels it controls in Columbia.
"What is important is that the master plan [for downtown Columbia] was very carefully kept in place and intact," Hamm said. "I think it's very positive. It lays out a very predictable structure for the future success of downtown Columbia."
The reorganization plan was filed Monday in a federal bankruptcy court in New York. The action came 15 months after General Growth filed the largest real estate bankruptcy case in U.S. history. At the time, General Growth was the nation's second-largest owner of retail centers, after the Simon Property Group, with approximately 200 malls and specialty centers.
Most of General Growth's Maryland properties were developed by the Rouse Co. and bought by General Growth in 2004, when it acquired the Rouse Co. portfolio for $11.3 billion. That acquisition was largely responsible for causing the financial problems that led General Growth to seek bankruptcy court protection, analysts say.
Since then, General Growth has been working with creditors to restructure its debt and emerge from bankruptcy. On Tuesday, the company said it expects to emerge from bankruptcy court protection with a "significantly improved balance sheet and substantially less debt." So far, General Growth says it has restructured nearly $15 billion in project-level debt. It plans to satisfy debt and other claims in full and provide a "substantial recovery" to shareholders. It also plans to have between $7 billion and $8.5 billion of new funds.
A judge is expected to start considering the reorganization plan in August. Once the company emerges from Chapter 11 protection, shareholders will own stock in both General Growth and Spinco, according to the proposed plan. "I am confident that both companies will be extremely well-positioned to succeed," General Growth CEO Adam Metz said in a statement.
The company said Monday that it is getting a $500 million infusion from a teachers' pension fund. The Teacher Retirement System of Texas will receive shares priced at $10.25 in the reorganized company in exchange for the cash. Also on Monday, General Growth agreed to turn over management responsibility for 18 malls in 11 states to Jones Lang LaSalle, including Towson Commons in Baltimore County.