» » General Growth Inks Mall Deal With Jones Lang LaSalle; To Get $500 Mln Investment From Pension Fund – Update

General Growth Inks Mall Deal With Jones Lang LaSalle; To Get $500 Mln Investment From Pension Fund – Update

(RTTNews) – Mall owner General Growth Properties Inc. (GGP, GGWPQ.PK) and real estate service provider Jones Lang LaSalle Inc. (JLL) said Monday that they have entered into a long-term strategic alliance, under which Jones Lang LaSalle has taken over General Growth’s third-party management business. The third-party management business operates 18 U.S. malls that General Growth does not own. The terms of the deal was not disclosed.

Separately, General Growth said it has entered into a deal with The Teacher Retirement System of Texas, under which the company will receive a $500 million equity investment from the pension fund.

Under the deal with Jones Lang LaSalle, the change in management and leasing responsibilities is effective immediately. In addition, about 200 employees who comprise the management teams at the 18 properties in addition to 30 corporate employees who provide services to the properties will become Jones Lang LaSalle employees.

Accordingly, General Growth employees – Mark Hunter, former senior vice president of third-party management; Donn Fuller, vice president of asset management and development; and John Taylor, vice president of accounting and finance, will become senior vice presidents at Jones Lang LaSalle.

The portfolio of 18 regional shopping malls and community centers in 11 states adds more than 11 million square feet to Jones Lang LaSalle’s retail portfolio of 84 million square feet in the Americas and 265 million square feet worldwide.

The eighteen properties are Alexandria Mall in Louisiana; Branson Landing in Missouri; Burbank Town Center, Palladio at Broadstone, and The Shops at Tanforan in California; Cherokee Square Shopping Center and Northgate Mall in Tennessee; Festival Bay Mall and University Mall in Florida; Kings’ Shops, Queen Ka’ahumanu Center and Windward Mall in Hawaii; Laurel Commons and Towson Commons in Maryland; The Shops at Georgetown Park in Washington, DC; St. Lawrence Centre in New York; Swansea Mall in Massachusetts and Westdale Mall in Iowa.

Chicago-based General Growth owns more than 200 regional shopping malls in 44 states. The third-party management business was not included in the company’s bankruptcy filing in April 2009.

Through the strategic alliance, the two companies will also work together to pursue opportunities for Jones Lang LaSalle to provide additional third-party services to new and existing clients.

Under the alliance, Jones Lang LaSalle will leverage the full range of services it provides to investors in retail properties, including leasing and management as well as investment sales and other capital markets services.

Greg Maloney, president of Jones Lang LaSalle Retail, said, “The opportunity to partner with General Growth Properties and bring these properties into our portfolio allows us to be able to provide our strategic services to new and existing clients, help these owners maximize the value of their assets, welcome more than 200 talented retail experts into our team and expand our portfolio with 18 quality regional malls and community centers across the country.”

Separately, General Growth said it has executed a deal with the Teacher Retirement System or TRS of Texas, a U.S. pension fund. Under the deal, TRS will invest $500 million in exchange for equity in reorganized General Growth at $10.25 per share.

The TRS investment will be in the equity of reorganized General Growth only and will not include any interest in the newly formed company to be spun-off to the company’s shareholders upon emergence from bankruptcy.

TRS delivers retirement and related benefits authorized by the Texas Legislature and manages the $96.7 billion trust fund established to finance member benefits.

General Growth noted that the deal, subject to approval by the bankruptcy court, will enhance the company’s expected capital structure on emergence from Chapter 11. The deal has a $15 million breakup fee.

General Growth said that its initial investment agreements with Brookfield Asset Management (BAM), Fairholme Funds and Pershing Square Capital Management provide sufficient capital for the company to emerge from Chapter 11 and includes a backstop provision for $1.5 billion of debt and $500 million of equity required for emergence.

Adam Metz, chief executive officer of General Growth, said, “Although we previously obtained sufficient capital commitments to enable us to emerge from Chapter 11, this transaction expands and diversifies our ownership base on attractive terms and preserves our ability to continue to seek more favorable equity investments. We continue to make excellent progress with our restructuring plan and are well on our way to exiting Chapter 11 by October of this year.”

UBS Investment Bank and Miller Buckfire & Co. LLC served as financial advisors to General Growth, while Weil, Gotshal & Manges LLP acted as the company’s legal counsel on the transaction.

In Monday’s regular trading session, GGP is trading at $13.72, down $0.03 or 0.22% on a volume of 0.12 million shares. JLL is trading at $67.76, up $0.05 or 0.07% on a volume of 6,150 shares.

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