General Growth Properties (NYSE: GGP) has sold the management and leasing responsibilities for its third-party management division to Jones Lang LaSalle (NYSE: JLL) as General Growth attempts to emerge from Chapter 11 bankruptcy protection.

The five-year agreement calls for General Growth and JLL to share management revenues on a portfolio of 18 regional shopping malls and community centers across 11 states. The agreement is on an earn-out basis with no upfront price, and takes effect immediately.

The 200 employees comprising the management teams of the 18 properties plus 30 General Growth corporate employees will become Jones Lang LaSalle employees.

The portfolio adds more than 11 million sq. ft. to JLL’s retail portfolio of 84 million sq. ft. in the Americas and 265 million sq. ft. worldwide.

“It fits very well into our existing structure,” says Greg Maloney, president of Jones Lang LaSalle Retail, based in Atlanta. Along with the 230 employees JLL is adding, 16 new clients are also coming on board with this deal.

“The people that we’re bringing in are moving just down the street or only within a few miles from one office to another,” says Maloney. “The benefit to JLL is the new talent and new clients as this deal solidifies our position as a third-party provider of regional mall real estate in the country.”

Another benefit to JLL is any possible additional contracts that General Growth might send its way due to this alliance.

“If they decide to sell some properties, we’ll get a shot at the investment sale piece,” adds Maloney. “We are positioned to offer our services for a variety of transactions.”

Chicago-based General Growth’s third-party management arm is a separate business from the mall owner’s main processes, and therefore, wasn’t protected from bankruptcy. The alignment with JLL will allow General Growth to remove top tier management from its payroll in its efforts to reorganize.

“This strategic alliance with Jones Lang LaSalle also allows our clients to leverage the resources and talents from GGP and Jones Lang LaSalle and, ultimately, create a broader range of services for our clients,” says Tom Nolan, president and chief operating officer for General Growth.

Reorganization Plan
General Growth has filed a reorganization plan that would implement a recapitalization of between $7 billion and $8.5 billion of new capital and create two publicly traded companies. Under the plan, one group would include completed properties and the other would oversee planned communities.

GGP also landed a $500 million equity investment from the Teachers Retirement System of Texas this week in another step to help the REIT emerge from bankruptcy protection.

General Growth owns or manages more than 200 regional shopping malls in 43 states.