Asset manager invests $500M in General Growth

August 18, 2010|By From Sun staff and news services

Asset manager Blackstone Group has agreed to invest about $500 million in shares of General Growth Properties Inc. once the shopping mall operator emerges from Chapter 11 bankruptcy protection.

General Growth, which owns most of the regional malls in Central Maryland, disclosed Blackstone's role in a regulatory filing Wednesday detailing an amended version of its proposed reorganization plan.

An investor group composed of Canadian property manager Brookfield Asset Management Inc., the Fairholme Fund and Pershing Square Capital Management has agreed to provide up to $8.5 billion in capital to finance General Growth's exit from bankruptcy.

The plan calls for the Chicago-based company to emerge from bankruptcy protection this fall as two separate companies: General Growth and the newly formed Spinco.

The new General Growth would include in its portfolio Maryland properties such as Harborplace, the Gallery, the Village of Cross Keys, Mondawmin Mall, Towson Town Center, Owings Mills Mall and White Marsh Mall.

However, Merriweather Post Pavilion, General Growth's regional headquarters on Little Patuxent Parkway and other lakefront property would go to Spinco.

Under the terms of agreements between the Blackstone Group LP and the investor group, once General Growth emerges from bankruptcy, Blackstone would pay about $500 million for shares in General Growth and Spinco.

General Growth, which is based in Chicago, filed the nation's largest real estate bankruptcy case in U.S. history in April 2009. At the time, it owned about 200 shopping malls, including Faneuil Hall in Boston, the Glendale Galleria in Southern California and the South Street Seaport in Manhattan.

A judge is expected to begin considering the plan before the end of the month.

Last week, the company disclosed in a quarterly report that the Securities and Exchange Commission is conducting a formal investigation into whether certain current and former officers and directors at the company might have engaged in insider trading.

General Growth did not say which executives were being targeted by the probe.

The company it first received notice about the investigation from the SEC in July.

The investigation is the next step in an informal inquiry launched by regulators in October 2008, General Growth said in the filing.

The company said it was cooperating with the probe and believed the outcome of the investigation would not have a material adverse effect on its financial condition or results.

A call to a General Growth spokesman was not immediately returned Wednesday.

General Growth shares added 25 cents to $14.32.

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