Report: General Growth Launching New REIT?

Reuters, citing two unnamed sources, reported that General Growth Properties is considering spinning 35 of its properties off into a new REIT.

From the report:

The assets going into the REIT consist of neighborhood strip malls, office properties and weaker regional malls the company had planned to sell or return to lenders, the sources said.

It was unclear whether the REIT would be publicly traded.

"GGP has publicly said we will pare our portfolio down to our core properties," General Growth spokesman David Keating said in an email. "No final decision has been made, nor will it be until we explore all viable options."


"We believe this unexpected step may have resulted from an inability to get desired pricing on its non-core assets, which were being marketed for sale," Benjamin Yang, an analyst with Keefe, Bruyette & Woods, wrote in a note.

Yang said the pricing for a lower quality mall has been "all over the map in recent months" and that demand may not be "as deep as previously thought."

When General Growth emerged from bankruptcy after a restructuring process it split some of its assets--such as land, undeveloped malls, master-planned communities and other non-core holdings--into a separate firm called the Howard Hughes Corp.

General Growth retained ownership of the core regional mall portfolio. But it has been talking of selling part of its portfolio for some time.

It has quietly been making one-off moves as well. The firm reportedly has a deal in place to sell Faneuil Hall Marketplace to Ashkenazy Acquisitions Corp. for $136 million. In addition, last week Coyote Management and Garrison Investment Group announced that they had acquired General Growth's 1.2-million-square-foot Chapel Hills Mall.

And this morning General Growth revealed a deal with Macerich under which Macerich will acquire General Growth's one-third ownership in two Phoenix-area malls for $75 million and General Growth will get six anchor stores in four states from Macerich.

In all, it remains a busy time for the second largest mall REIT as it continues to right-size its portfolio and clean up its balance sheet.

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