General Growth Properties has exited from bankruptcy protection with plans to raise more than $2 billion of fresh equity on the New York Stock Exchange.
The mall REIT said in a statement it planned to sell 135 million of common stock in the reorganisation GGP, when it relists on the NYSE Wednesday with an expected offering price of $14 per share. Another 20.25 million shares could also be sold by underwriters, bringing the expected equity haul to $2.17 billion.
The proceeds will be used to pay back at least $1.6 billion of rescue capital provided by hedge funds Fairholme Capital, Pershing Square Capital Management and the US public pension, the Teacher Retirement System of Texas, according to a separate SEC filing.
Together with Brookfield Asset Management, which invested $1 billion of equity in GGP, and The Blackstone Group, which invested $481 million through its $10.9 billion Blackstone Real Estate Partners VI fund, the five firms have provided $6.8 billion of rescue capital to help GGP emerge from Chapter 11 bankruptcy protection.
Adam Metz, chief executive officer, said in a statement the Chapter 11 exit marked the “end of one chapter in GGP’s history and the beginning of another. Over the past 19 months, we have taken extraordinary steps to remake GGP’s entire financial structure.”
The Chapter 11 process saw the company split in two, require $6.8 billion of recapitalisation equity and require the restructuring of $15 billion of project-level debt.
GGP has now been split into two separate publicly traded companies. GGP will continue to operate and own more than 185 stable, income-producing regional malls in 43 states, while a spin-off – known as The Howard Hughes Corporation – will control the non-income producing assets owned by the REIT, including development land and air space with approved planning consents.
Goldman Sachs and Deutsche Bank Securities are acting as joint coordinators for the rights offering. Wells Fargo Securities, RBC Capital Markets, Barclays Capital, UBS Investment Bank and Morgan Stanley are serving as joint book-running managers, while Macquarie Capital and TD Securities are serving as senior co-managers and Piper Jaffray is serving as co-manager.
GGP first filed for bankruptcy protection in April 2009, taking with it 158 cash-flowing properties that were created as “bankruptcy-remote” special purpose entities, after being unable to renegotiate the maturity terms on its debt load.