Mall owner General Growth files for reorganization

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Chicago (AP) — General Growth Properties Inc. reported Tuesday it filed a proposed reorganization plan with a federal bankruptcy court and expects to emerge from Chapter 11 protection this fall as two separate companies.

The real estate investment trust filed the nation’s largest real estate bankruptcy case in U.S. history 15 months ago. At the time, General Growth owned about 200 shopping malls, including Mayfair Mall in Wauwatosa and the Fox River Mall in Appleton.

On Tuesday, the Chicago company reported it expects to emerge in October with a “significantly improved balance sheet and substantially less debt.”

So far, General Growth reports it has restructured about $15 billion in project-level debt. It plans to satisfy debt and other claims in full and provide a “substantial recovery” to shareholders. It also plans to have between $7 billion and $8.5 billion of new money.

The company on Monday reported it is getting a $500 million infusion from a Texas teachers’ pension fund. The Teacher Retirement System of Texas will receive shares priced at $10.25 per share in the reorganized company in exchange for the cash.

When General Growth exits Chapter 11 protection, shareholders will own stock in both General Growth and the newly formed Spinco.

General Growth expects to come out of bankruptcy court with 180 properties, making it the second-largest shopping mall owner behind rival Simon Property Group Inc., which decided this spring not to acquire the struggling company. General Growth earlier this week agreed to turn over management responsibility for 18 malls in 11 states to Jones Lang LaSalle.

Spinco will manage a diverse group of properties with little debt that have development potential. Its holdings also include the company’s master-planned communities and mixed-use development projects.

“I am confident that both companies will be extremely well-positioned to succeed,” according to a statement attributed to General Growth CEO Adam Metz.

A judge is expected to begin considering the plan in mid-August.