General Growth Properties emerges from bankruptcy

Company operates Baltimore's Harborplace and Columbia mall

November 09, 2010

General Growth Properties Inc, the second-largest U.S. mall operator, said it has emerged from bankruptcy, 11/2 years after becoming the biggest U.S. real estate company to seek Chapter 11 protection.

The Chicago-based operator of 183 shopping malls in 43 states said Tuesday that it had emerged from under protection from creditors after obtaining $6.8 billion in new equity capital and restructuring about $15 billion of debt.

General Growth properties include Baltimore's Harborplace and the Gallery as well as The Mall in Columbia. It also operates Faneuil Hall Marketplace in Boston and Water Tower Place in Chicago.

The company also began an offering to sell 135 million common shares, worth roughly $2.35 billion as of Tuesday's close. Most proceeds would go to repurchase stock issued to Fairholme Funds Inc., Pershing Square Capital Management LP and the Teacher Retirement System of Texas, each of which provided some of the equity capital. Canada's Brookfield Asset Management Inc. also provided equity capital.

As part of its restructuring, General Growth spun off Howard Hughes Corp., which operates planned residential communities and other properties, including South Street Seaport in Manhattan.

Shareholders of record as of Nov. 1 received stock in both companies. Howard Hughes, named for the late billionaire eccentric, is expected to trade on the New York Stock Exchange under the "HHC" ticker and be run by Sandeep Mathrani, former president of Vornado Realty Trust's retail business.

General Growth filed for bankruptcy protection in April 2009 after tight credit conditions left the company unable to refinance billions of dollars of maturing debt. It had $29.56 billion in assets, according to BankrupctcyData.com.

Unlike many rivals, however, General Growth had many properties that generate steady cash flow, giving the company the financial ability to work through the bankruptcy process.

Creditors were paid in full, and equity investors who often get wiped out instead obtained a "substantial" recovery on their claims, General Growth said. Both are unusual.

"We have taken extraordinary steps to remake General Growth's entire financial structure," Chief Executive Adam Metz said in a statement.

William Ackman, who runs the Pershing Square hedge fund, championed a Chapter 11 filing as the best way for General Growth to restructure. His 25 percent stake cost him less than $200 million and is now worth more than $1 billion.

General Growth shares closed down 41 cents Tuesday at $17.39 on the New York Stock Exchange.

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