GGP offers reorganization plan 

Posted: 6:24 pm Wed, March 3, 2010
By Robbie Whelan
Daily Record Business Writer

As potential purchasers jockeyed for position in the fight to purchase bankrupt mall-owner General Growth Properties Inc., the company laid out a reorganization plan that could see GGP emerging from bankruptcy by Oct. 5.

General Growth said in a filing Monday in bankruptcy court that it will submit a motion by March 19 to erect procedures for testing whether anyone will top the proposal from Brookfield Asset Management Inc. to finance a reorganization plan by investing $2.65 billion cash in return for 30 percent of the stock.

The reorganization plan still requires the approval of a bankruptcy judge, who must first agree to the schedule. If that happens, other bids would be due May 18. General Growth expects to select the best offer, file a reorganization plan for the remaining companies, and have the bankruptcy court approve the explanatory disclosure statement by July 27.

GGP has been gaining suitors for its assets steadily over the last month. On Feb. 16, Indianapolis-based Simon Properties Group, the nation’s largest mall-owner and GGP’s main competitor, made a $10 billion all-cash offer for the company. General Growth, with its portfolio of 216 shopping centers, is the country’s second-largest mall owner.

In the Baltimore area, General Growth owns 10 mall properties, including Towson Town Center, Harborplace &The Gallery, The Mall at Columbia, White Marsh Mall and The Village of Cross Keys. Simon owns Arundel Mills.

But GGP rejected the Simon merger, and a week later signaled that it was leaning towards accepting a bid from Canadian investment firm Brookfield, which offered to take a $2.625 billion equity stake in the company and pay off the interest GGP owes to its unsecured creditors. Analysts said the Brookfield offer, which values GGP stock at $15 per share, compared to Simon’s $9 per share, was a “stalking horse” bid meant to attract bigger offers.

Late last month, the Wall Street Journal reported that Westfield Group, an Australian shopping center owner, was preparing a bid for GGP’s assets, and on Wednesday, the New York Post reported that Vornado Realty Trust, a $20 billion company that owns about 75 office towers and about 50 shopping centers, mostly in the New York and Washington markets, may be preparing a bid as well.

On Tuesday, General Growth CEO Adam Metz released a statement announcing that he expects the company to begin trading common stock on the New York Stock Exchange under the symbol “GGP” on Friday. GGP stock was delisted from the NYSE in April when the company filed the largest real estate bankruptcy in history, with assets of $29.6 billion and total liabilities of $27.3 billion as of Dec. 31, 2008.

“We are pleased to again be eligible for listing on the New York Stock Exchange, the world’s largest and most liquid trading market,” Metz said in the statement. “Trading again on the NYSE will mark an important milestone in GGP’s restructuring process.”

Also this week, General Growth announced financial results for the December quarter and 2009. For the year as a whole, the net loss was $1.28 billion on total revenue of $3.14 billion. The results for the year included $1.22 billion of provisions for impairments.

For the quarter ended Dec. 31, the net loss was $612 million on $794 million in total revenue. Provisions for impairments in the quarter were $749 million.

In four batches of confirmations in December, January and February, Chapter 11 plans were approved for property-owning General Growth subsidiaries having loans representing $10.65 billion in mortgage debt. Restructurings for another $1.7 billion in mortgages are expected to be completed in the 2010 first quarter.

General Growth said it will use “non-consensual resolution if necessary” to restructure the remaining $2.5 billion mortgage debt.

The financing from Brookfield is aimed in significant part at laying the groundwork for restructuring $6.5 billion of unsecured debt at the holding company level.

Bloomberg contributed to this article.