Even in a season of big deals, General Growth's $12 billion acquisition of Rouse stands out. One clear reason is price. General Growth agreed to pay $67.50 a share for the Columbia, Md.-based Rouse, a 33 percent premium over the REIT's previous close, and also agreed to assume $5.4 billion in Rouse debt. General Growth will pay $500 million in closing costs. The deal represents a first-year unlevered cap rate between 5 percent and 5.25 percent. Given the quality of Rouse's portfolio and the synergies that the combined companies will enjoy, "We strongly believe that it is a fair price," CFO Bernie Freibaum told analysts shortly after the deal was announced.

To Barry Vinocur, the editor and publisher of Realty Stock Review, REIT Wrap and REIT Newshound, the deal seems likely "to rekindle the smoldering debate" over whether REITs' NAVs are too low -- a debate he says could "have very real implications for investors."

The acquisition, which is expected to close in the fourth quarter, goes a long way toward bolstering General Growth's already strong portfolio. Rouse either owns or holds stakes in 37 malls and other retail properties totaling 40 million square feet, among them some of the best-known retail sites in the country, including Chicago's Water Tower Place, Boston's Fanueil Hall Marketplace and Manhattan's South Street Seaport. Rare is the slacker in its lineup: Rouse's retail space generates sales of $439 per square foot and has an occupancy rate of 92 percent.

"We are in place to make the equivalent of five years worth of acquisitions in one fell swoop," CEO John Bucksbaum told analysts. "The Rouse portfolio has always been considered among the most highly productive and well-positioned collection of properties in our business." The deal will bring General Growth's portfolio closer in size to that of Simon Property Group. According to Retail Traffic's 2004 ranking of top retail space owners, approximately 30 million square feet of space will differentiate No.1 Simon and No.2 General Growth once the Rouse deal is completed.

It also gives General Growth a new business component in the form of land development. Rouse is considered the father of planned communities, having built the town of Columbia, Md., and the Las Vegas suburb of Summerlin.

But nothing on such a large scale comes without a price. When the deal closes, General Growth will be carrying debt of $23 billion, or 71 percent of its total capitalization. It vows to begin immediately to work that down.

With stratospheric valuations becoming commonplace, is it possible General Growth paid too much? "It's too soon to know," says Vinocur. But he quickly adds that the Chicago company's management "is among the best of the best. They've made a lot of money for a lot of people."