CHICAGO-General Growth Properties Inc. filed its formal Form 10 registration Monday with the Securities and Exchange Commission to distribute a 21.1-million-square-foot, 30-mall portfolio to GGP stockholders through a taxable dividend plan. In the filing, the company said the new company, Rouse Properties Inc., will spend about $230 million to renovate the properties.
Rouse is expected to qualify as a REIT, with the distribution expected during the fourth quarter. With the distribution, GGP, which filed for Chapter 11 bankruptcy in April 2009, is able to discard its B- and lower-rated malls. Following the distribution, Rouse will have two classes of common stock outstanding: common stock, all which will be distributed to GGP stockholders, and non-voting Class B common stock, all of which will be held by a subsidiary of GP and will represent 1% of the aggregate shares of Rouse common stock. No shareholder vote is required.
The new company’s business plan “requires specialized asset management approaches that are expected to benefit from a dedicated management team focused exclusively on executing strategies to maximize value,” according to the filing. “Some properties may require re-tenanting and re-constitution of the merchandising mix in order to provide new and relevant shopping and entertainment opportunities for the consumer.”
The 30 malls are about 87.7% leased with $279 per square foot tenant sales. Core NOI of the portfolio was about $161.5 million in 2010. “We believe our portfolio’s lease expiration schedule over the next five years will provide an increase in NOI as the new rental rates will be higher than the expiring rents, which are below our portfolio’s average effective gross rent per square foot during the recession of the last two years,” GGP said in the filing.
The goals of the new company, GGP said in the filing, are to reposition and refresh the properties, particularly with approximately $230 million of development expenditures through 2015. Rouse will aggressively pursue lease-up of vacant space, convert temporary tenants to permanent tenants, improve property aesthetics and evaluate external growth opportunities as appropriate, including transforming low value in-line space into big box to meet demand for fitness centers, sporting goods stores, electronics stores and supermarkets.
Brookfield Asset Management has agreed to provide either a $100 million revolving subordinated credit facility and/or a backstop commitment for up to $200 million.
The properties include 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. There are four malls each in California and Michigan, and three in Texas.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
