Tag: ackman

Here is the news, more on this tomorrow including more on Ackman’s role

-General Growth Properties, Inc. (NYSE:GGP) (the “Company”) announced today the administrative agent under the Company’s 2006 Senior Credit Agreement received consents from the requisite lenders thereunder to waive certain identified events of default under the 2006 Senior Credit Agreement and to forbear from exercising certain of the lenders’ default related rights and remedies with respect to such identified events of default until December 31, 2009 (unless terminated earlier in accordance with the terms of such forbearance agreement), subject to certain conditions, including final documentation.

The Company also announced today its subsidiary, The Rouse Company LP (“TRCLP”), has extended the expiration date for its previously announced consent solicitation to 5:00 p.m., New York City time, on March 20, 2009. In the solicitation, TRCLP is seeking consents from the holders of TRCLP’s unsecured notes (five series with an aggregate outstanding principal amount of approximately $2.25 billion at December 31, 2008) (the “TRCLP Notes”) to forbear from exercising remedies with respect to various payment and other defaults under the TRCLP Notes through December 31, 2009.

The Company also noted that it has been informed by the representatives of an ad hoc committee of holders of TRCLP Notes, the members of which hold in the aggregate approximately 41% of TRCLP Notes, that all of the members of the ad hoc committee have committed to consent to the forbearance.

As of 5:00 p.m. on March 16, 2009, consents had been validly delivered (and not validly revoked) with respect to the following amounts of TRCLP Notes (click to make larger):

The minimum acceptance levels for each series of the TRCLP Notes are: 90% of the 3.625% Notes due 2009 and the 8% Notes due 2009; 75% of the 7.20% Notes due 2012, the 5.375% Notes due 2013 and the 6 3/4% Notes due 2013. Holders of TRCLP Notes who have previously validly delivered consents will continue to have the right to revoke their consents through the extended expiration date.

Effectiveness of the forbearance under the 2006 Senior Credit Agreement will be conditioned on and subject to, among other things, the successful completion of the consent solicitation and effectiveness of the forbearance agreement relating to the TRCLP Notes.

“We are pleased that we have been able to obtain consents from the requisite lenders under our 2006 Senior Credit Agreement and with the positive reaction to the TRCLP bond consent solicitation,” said Adam Metz, chief executive officer. “Given this support, we feel it is appropriate to extend the expiration date for the consent solicitation in order to give bondholders more time to receive and review the consent solicitation materials and to consider this request.”

GGP INFORMATION

General Growth is a U.S. based, publicly traded Real Estate Investment Trust. The Company currently has an ownership interest in, or management responsibility for, more than 200 regional shopping malls in 44 states, as well as ownership in master planned community developments and commercial office buildings. The Company portfolio totals approximately 200 million square feet of retail space and includes over 24,000 retail stores nationwide. The Company is listed on the New York Stock Exchange under the symbol GGP.

Disclosure (“none” means no position):Long GGP

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I am buying shares of General Growth Properties (GGP) today as I feel there is deep value in them.

Where is the value? General Growth is a U.S. based, publicly traded Real Estate Investment Trust. The Company currently has an ownership interest in or management responsibility for a portfolio of more than 200 regional shopping malls in 44 states, as well as ownership in master planned community developments and commercial office buildings. The Company portfolio totals approximately 200 million square feet of retail space and includes over 24,000 retail stores nationwide. The Company is listed on the New York Stock Exchange under the symbol “GGP”. For more information, visit the Company Web site at www.ggp.com.

GGP carries it’s real state holding at cost and according to its 2007 annual report, the total is $28 billion. If we take the 200 million sq. feet of retail space they have, the cost basis is $140 a sq. foot.

Now, let’s look at the MIT Transaction based cost index for the 2008 year. This matters because it takes into account what sold for what, not an estimated value.

Retail Current Cost

Using the $195 a sq. foot price from MIT, we get a real estate value for GGP of $39 billion. GGP has a current market cap of $115 million meaning it sells for .3% of its real estate value, that is point 3% not 3%. With $27 billion of debt outstanding and due in 4 years, if we subtract that from the current property value there is still $12 billion or $36 a share of value left in the properties (based on 331 million shares outstanding as of last 8K). Now, of course the actual amount will vary depending on what properties are sold where but we have a good indication by using national numbers because GGP does have holdings nationally.

To further boost a valuation, we can look at the age of the properties. Starting on F-61 of the above linked annual report we see that only $3 billion of the $28 billion total has been acquired since 2007. These properties one could argue were purchased at inflated prices and perhaps worth only equal too or slightly below carrying cost. The majority of the properties are 2002 and earlier giving a large boost to the “carry coast being far less than market value” theory.

Perhaps this is why Bill Ackman has taken a stake in 25% of the company.

The Loans:

On Feb. 12th GGP said:

On February 13, 2009, General Growth Properties, Inc. (the “Company”) and certain of its subsidiaries, including Oakwood Shopping Center Limited Partnership (collectively with the Company, the “Company Parties”), Citicorp North America, Inc., as a lender and as administrative agent for the other lenders party thereto, and certain additional lenders (collectively, the “Lenders”), entered into a First Amendment to Loan Agreement (the “Amendment”) which amended the Loan Agreement dated as of January 30, 2006 by and among the Company Parties and the Lenders for the mortgage loan secured by the Company’s Oakwood Shopping Center located in Gretna Louisiana (the “Loan”). Pursuant and subject to the terms of the Amendment, the maturity date of the Loan was extended to March 16, 2009. The Loan’s original maturity date of February 9, 2009 had previously been extended pursuant to agreements between the Company Parties and the Lenders.

The Company is currently in default under certain of its loans. As previously announced, the Company has entered into forbearance agreements with certain of its lenders pursuant to which such lenders have agreed to forbear from exercising certain of their default related rights and remedies under such loans. However, the forbearance agreements related to mortgage loans secured by the Company’s Fashion Show and Palazzo shopping centers located in Las Vegas, Nevada expired on February 12, 2009. The expiration of these forbearance agreements permitted the lenders under the Company’s 2006 Credit Facility and 2008 secured portfolio facility to terminate the previously announced forbearance agreements related to these loan facilities. However, the Company has not received notice of any such termination, as required by the terms of such forbearance agreements. In addition, the Company has also been unable to enter into or extend forbearance or similar agreements for its other mature secured mortgage loans, and there can be no assurance that it will be able to do so. The Company continues to work with its lenders with respect to loans under which it is in default or may be in default in the near future.

What does it all mean. Simply, even if GGP were forced into bankruptcy, the actual value of it exceeds the debt meaning there is still large value for shareholders. At $.43 cents a share, the upside is stunning and the downside is limited to your investment, $.43 cents.

What will the lenders do? Think about it. Do the lenders really want to start writing down commercial real estate loans for one of the largest property owners in the US by forcing it into bankruptcy? No. Why? In our “mark to market” world we now live in, this would mean that debt on other strapped REIT’s would then have to be “marked down” also causing more billion dollar losses for banks. Not good.

This is the reason for the various debt extensions for GGP.

Earnings come out today after being delayed for two weeks. One has to expect some news to accompany them. I am buying shares ahead of it

Disclosure (“none” means no position):Long GGP

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No more AIG (AIG), Lowes (LOW) or Mastercard (MA). Ackman did not take Wells Fargo (WFC) shares in the Wachobia (WB) buyout, he added REIT’s General Growth Properties (GGP) and Alexanders (ALX) 

So, what is the “back to the beginning” stuff? Remember a young college student Bill Ackman? He paid half his tuition as a student by snapping up shares in Alexander’s Inc. at $8.50, days before the retailer went bankrupt. As he suspected, the real estate proved so valuable the shares now trade at nearly $57 (in 1993 when it was reported). Alexanders now trades at $157,down from $425 in September.

For those wondering, the General Growth Properties investment is an identical bet by Ackman (read more about it here).

November 2008 Filing:

Feb. 2009 Filing

Disclosure (“none” means no position):

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Barron’s talks about Ackman’s purchases of General Growth (GGP) and Gates’s of Otter Tail (OTTR)

Disclosure (“none” means no position):Long GGP, none

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Ackman now has an interest in nearly 25% of General Growth Properties (GGP) shares

On 12/8 Ackman disclosed a 18% economic interest.

In today’s filing he has boosted that to 24%

“This Amendment No. 2 (this “Amendment No. 2”) amends and supplements the statement on Schedule 13D, as previously amended to date (the “Schedule 13D”) by (i) Pershing Square Capital Management, L.P., a Delaware limited partnership (“Pershing Square”), (ii) PS Management GP, LLC, a Delaware limited liability company (“PS Management”), (iii) Pershing Square GP, LLC, a Delaware limited liability company (“Pershing Square GP”), and (iv) William A. Ackman, a citizen of the United States of America (collectively, the “Reporting Persons”), relating to the common stock, par value $.01 per share (the “Common Shares”), of General Growth Properties, Inc., a Delaware corporation (the “Issuer”). Capitalized terms used herein but not defined herein shall have the meaning set forth in the Original 13D.

As of January 9, 2009, the Reporting Persons beneficially owned an aggregate of 22,901,194 Common Shares (the “Subject Shares”), representing approximately 7.4% of the outstanding Common Shares. The Reporting Persons also have additional economic exposure to approximately 52,000,000 Common Shares under certain cash-settled total return swaps (“Swaps”), bringing their total aggregate economic exposure to 74,901,194 Common Shares (approximately 24.1% of the outstanding Common Shares). Although this Schedule 13D filing reflects additional purchases of Common Shares and Swaps, the Reporting Persons total beneficial ownership percentage and aggregate economic exposure has decreased due to the dilutive effects arising from the conversion of 42,350,000 common partnership units held in the Issuer’s operating partnership into 42,350,000 Common Shares, as announced by the Issuer on January 5, 2009.”

Here is the trading data:

Disclosure (“none” means no position):None
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