General Growth Properties Files Amended Shelf: The Bottom Line

| About: General Growth (GGP)

“With this amended S-11 filing, we draw even closer to the completion of the successful restructuring of General Growth Properties (NYSE:GGP),” said Adam Metz, chief executive officer of GGP.

We are extremely pleased with our progress to date and see a clear path to confirmation at our court hearing on October 21. In addition, we have enhanced our corporate governance policies by eliminating the staggered board structure at GGP and moving to annual elections of all directors. We look forward to completing these transactions and moving forward as a financially strong, focused company.

On October 11, 2010, New GGP gave a notice to the investors (pdf) whereby New GGP preserved the right to repurchase within 45 days after the Effective Date up to 155 million shares (representing $1.55 billion of the shares issued to Fairholme and Pershing Square on the Effective Date) at $10.00 per share and up to approximately 24.4 million shares (representing $250.0 million of the shares issued to Texas Teachers on the Effective Date) at $10.25 per share with the proceeds in this offering.

In order to be entitled to repurchase such shares, the price per share of common stock issued in this offering must be at least $10.50 per share (net of all underwriting and other discounts, fees and related consideration). In connection with our election to reserve shares for repurchase, we paid to Fairholme and Pershing Square, as applicable, in cash on the Effective Date, an amount equal to $0.25 per reserved share (approximately $38.75 million in the aggregate). No fee was required to be paid to Texas Teachers.

New GGP, the issuer of the common stock registered hereby, is a newly-formed, indirect finance subsidiary of General Growth Properties, Inc. (“Old GGP”) and prior to Old GGP’s emergence from bankruptcy (as described below) will not have any prior operations or material assets or liabilities. Upon Old GGP’s emergence from bankruptcy, which is expected to occur prior to the commencement and completion of this offering, and pursuant to a series of restructuring transactions contemplated by the plan of reorganization (the “Plan”) in connection with the emergence from bankruptcy of Old GGP and certain of its subsidiaries:

New GGP will become the indirect parent corporation of Old GGP; New GGP will be renamed General Growth Properties, Inc. and Old GGP will continue to exist and be renamed GGP, Inc.;

New GGP will be renamed General Growth Properties, Inc. and Old GGP will continue to exist and be renamed GGP, Inc.; ...

The Bottom line: The $10 and $10.50 shares Pershing/Fairholme and the Texas teachers would be buying are gone and they’ll be replaced with shares purchased at $10.75 or higher (I am assuming $.25 of fees etc since the “net” price they can be clawed back is $10.50). A higher price means either more money will be raised or fewer shares will be issued. Either scenario means a higher valuation of the equity and that means higher share prices.