General Growth Properties, Inc. (NYSE: GGP) has joined the club of special situation investing after it approved the spin-off of Rouse Properties, Inc. via a “pro rata taxable dividend of voting common stock” of Rouse Properties held by GGP.
The distribution date is going to be Thursday, January 12, 2012 for General Growth holders of record as of the close of business on Friday, December 30, 2011. Each GGP share of common stock will receive approximately 0.0375 shares of Rouse Properties’ common stock representing a distribution ratio of 1:26.66.
Approximately 35.5 million shares of Rouse Properties’ common stock are expected to be outstanding immediately following the spin-off. The problem is that the smaller shareholders here will end up with very few shares. Rouse Properties had historical core net operating income of approximately $113.1 million for the nine months ended September 30, 2011.
After the distribution, Rouse Properties will have about $1.16 billion of debt outstanding with a weighted average interest rate of approximately 5.6%, This will be comprised of approximately $724.0 million of existing mortgage debt and a new three year senior secured term loan of approximately $433.5 million.
The senior secured term loan will be provided by a syndicate of lenders and the senior secured facility also includes a revolving credit facility in the amount of $50 million. In addition, Rouse Properties finalized the terms of a three and a half year subordinated unsecured revolving credit facility with an affiliate of Brookfield Asset Management, Inc. that will provide borrowings on a revolving basis of up to $100 million.
JON C. OGG
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