General Growth to Split in Two With Hedge Fund Help

Date: Wednesday, July 14, 2010
Author: Paula Schaap, HedgeFund.net

Mall owner General Growth Properties said it would split itself in two with the help of hedge fund firms’ investment as a way to restructure itself out of bankruptcy protection.

The company said Monday it would become two companies: the “new” General Growth, which will own or operate 183 regional malls and other regional properties and real estate company Spinco which will hold the companies’ long-term development and redevelopment properties.

As part of the restructuring, General Growth is getting $6.3 billion in capital commitments from Canadian property asset manager Brookfield Asset Management and hedge fund firms Fairholme Capital Management and Pershing Square Capital Management.

Pershing Square’s Bill Ackman has long been a fan of the bankrupt mall owner.

Pershing Square, along with the other two firms backstopping the current reorganization, successfully fought off a bid by mall owner and rival Simon Property Group to acquire the company.

Hedge fund firm Paulson & Co. was backing the Simon bid.

If all goes as planned, General Growth would emerge from bankruptcy in October 2010, about a year-and-a half after it filed for protection.