CHICAGO-In another move to clean up its balance sheet, locally based General Growth Properties announced late last night that it plans to divest 30 malls into a new separate REIT. The holder of the 21.1 million square feet of properties, now 87.7% leased, will be called Rouse Properties Inc.
GGP plans to transfer the Rouse Portfolio to a recently formed entity, Rouse Properties Inc., which is expected to qualify as a REIT and is expected to file for listing on the NYSE. GGP plans to spin-off this new entity to holders of GGP common stock as a taxable special dividend to be comprised of common stock. The distribution is expected to be made on a pro rata basis to holders of GGP common stock as of the dividend record date during the fourth quarter.
The properties are located in all sections of the country. Included malls range from the 303,619-square-foot White Mountain Mall in Rock Springs, WY to the 1.3-million-square-foot Southland Mall in Hayward, CA, as well as the 1.2-million-square-foot Spring Hill Mall in West Dundee, IL and the 1.2-million-square-foot Boulevard Mall in Las Vegas.
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These properties are malls that “generally have a different operating, capital and geographic focus than GGP’s core mall portfolio,” according to the company’s information package about the Rouse REIT deal. Tenant sales at these class B malls average about $279 per square foot, according to the package.
Sandeep Mathrani, GGP CEO, said in a statement that this spin-off will enhance shareholder value. “This is a win-win transaction that enables GGP shareholders to participate in Rouse's significant growth potential as a standalone entity and efficiently streamlines GGP into a highly focused, premier mall owner,” he said.
Mathrani told GlobeSt.com’s Ian Ritter in June that the firm expects to do about $1 billion in asset sales this year, and may want to get out of the class-B-mall business. The company filed for bankruptcy in April 2009 to try to restructure $27 billion in debt.
General Growth plans to release its second quarter 2011 earnings this morning, and will discuss the results in a conference call at 1 p.m. Eastern time today. The retail trust has ownership and management interest in 166 regional and super regional shopping malls in 43 states.
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