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Getting Caught Up on General Growth

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The news seems to be coming fast and furious with General Growth these days. There have been a lot of developments since we posted our news analysis on Tuesday afternoon.

The REIT is on the verge of announcing agreements on 30 more properties as its reorganization continues. The plan it filed covered debt on 92 properties. The company is also seeking court permission to pay a dividend to shareholders on Dec. 21 to avoid a $3.4 million tax hit.

ChicagoRealEstateDaily noted that General Growth's agreements with its lenders will cost the firm at least $423 million, although it may end up being even more expensive depending on how additional loans are treated in the reorganization plan.

However, its reorganization plan is facing a new foe as Dillard's is now objecting.

Dillard's said the plan impairs its rights under leases at 36 malls where it is a tenant, and affects its claims at a total of 51 properties.

General Growth has to meet certain agreements under the leases, including paying so-called mechanic's liens, and shouldn't be allowed to reject those provisions, the department- store operator said.

“The plan debtors cannot pick and choose which contractual provisions they will perform post confirmation and which will be overridden by other provisions of the plan,” lawyers for Dillard's wrote, saying the language in General Growth's plan wasn't clear.

Reuters had an excellent piece on the latest developments in potential bids by Simon and Brookfield. Simon appears to be a less likely suitor today. Brookfield, meanwhile, has been in contact with General Growth, but not offered a bid of any kind.

But Brookfield does remain a serious player in what happens. Todd Sullivan's Value Plays pointed to a $1 billion mixed shelf registration that Brookfield filed yesterday as proof of the seriousness of its intentions. You can check out the 157-page document here. For good measure, Brookfield also made a statement confirming that it is a meaningful creditor to General Growth. So it's very much in the middle of what happens.

Lastly, throughout the firm's bankruptcy, General Growth's share prices have been rising. The shares have been hovering at about $11.50 all day. Its 52-week low was $0.32 per share. Anybody that bought at that level and ridden the rise has to be ecstatic.

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Elaine Misonzhnik

Senior associate editor Elaine Misonzhnik has been writing for National Real Estate Investor since June 2006 and has covered commercial real estate for more than 12 years. She first became...
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