General Growth Properties Approves Spin-off of Rouse Properties and Announces Final Capital Structure

CHICAGO, Dec. 20, 2011 /PRNewswire/ -- General Growth Properties, Inc. (NYSE: GGP) ("GGP") announced today its board of directors approved the spin-off of its subsidiary, Rouse Properties, Inc. ("Rouse Properties").

The spin-off will be completed through a pro rata taxable dividend of voting common stock of Rouse Properties held by GGP on Thursday, January 12, 2012 (the "Distribution Date") to GGP stockholders of record as of the close of business on the New York Stock Exchange ("NYSE") on Friday, December 30, 2011 (the "Record Date"). On the Distribution Date, for every share of GGP common stock owned as of the Record Date, GGP stockholders 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 distribution of these shares will be made in book-entry form, which means no physical share certificates will be issued.

Rouse Properties filed an amendment to its Registration Statement on Form 10 ("Form 10") this morning with the Securities and Exchange Commission ("SEC"). Exhibit 99.1 to the Form 10 includes information about Rouse Properties' financial results, business and strategy, and other important information.

As previously disclosed in the Form 10, Rouse Properties had historical core net operating income of approximately $113.1 million for the nine months ended September 30, 2011. As further discussed in the Form 10, this amount does not represent a complete measure of Rouse Properties' anticipated results as a stand-alone public company once the spin-off is completed.

On the Distribution Date, Rouse Properties is expected to have approximately $1.16 billion of debt outstanding with a weighted average interest rate of approximately 5.6% 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 with Wells Fargo Bank, N.A., as administrative agent, and Wells Fargo Securities, LLC, RBC Capital Markets, LLC, and U.S. Bank National Association as joint lead arrangers.  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. ("Brookfield") that will provide borrowings on a revolving basis of up to $100 million.

Rouse Properties entered into a standby purchase agreement with an affiliate of Brookfield relating to the previously announced rights offering that Rouse Properties plans to commence following the completion of the spin-off, pursuant to which Brookfield has agreed to purchase at the rights offering price of $15.00 per share (i) its pro rata share of the common stock of Rouse Properties and (ii) any remaining shares of Rouse Properties common stock not otherwise subscribed for in the rights offering.

ADDITIONAL INFORMATION ABOUT THE SPIN-OFF

No fractional shares of Rouse Properties common stock will be issued. Fractional shares of Rouse Properties common stock to which GGP stockholders of record would otherwise be entitled will be aggregated and, after the distribution, sold in the public market by the distribution agent. The aggregate net cash proceeds will be distributed ratably to those holders of record who would otherwise have received fractional shares of Rouse Properties common stock.

GGP intends to report the distribution of Rouse Properties common stock (including cash in lieu of fractional shares) as a taxable dividend for U.S. federal income tax purposes and, therefore, the distribution of Rouse Properties common stock is expected to satisfy a portion of GGP's 2011 and 2012 REIT taxable income distribution requirements. 

Following the spin-off, GGP's common stock will continue to trade on the NYSE under the symbol GGP.  Rouse Properties intends to have its common stock listed on the NYSE under the symbol "RSE". An information statement concerning the details regarding the distribution of Rouse Properties common stock and its business and management following the spin-off will be mailed to GGP stockholders prior to the distribution date.

GGP shares will continue to trade "regular way" on the NYSE under the symbol "GGP" through and after the January 12, 2012 Distribution Date.  Any holders of shares of GGP common stock who sell GGP common stock "regular way" on or before January 12, 2012, will also sell their right to receive shares of Rouse Properties common stock. In addition, it is anticipated that GGP common stock will trade ex-distribution (without the right to receive shares of Rouse Properties common stock) on or about December 28, 2011, and continue through the Distribution Date under the symbol "GGP WI". Investors are encouraged to consult with their financial advisors regarding the specific implications of buying or selling GGP common stock on or before the Distribution Date.

A "when-issued" public trading market for Rouse Properties common stock is expected to begin on or about December 28, 2011 on the NYSE under the symbol "RSE WI" and will continue through the Distribution Date. GGP also anticipates "regular way" trading of Rouse Properties common stock under the symbol "RSE" will begin on Friday, January 13, 2012, the first trading day following the Distribution Date. Before the spin-off, GGP and Rouse Properties will enter into a separation agreement and various other agreements related to the spin-off.

The distribution of Rouse Properties common stock is subject to the satisfaction or waiver of certain conditions, including, but not limited to, the Form 10 being declared effective by the SEC, Rouse Properties' common stock being accepted for listing on the NYSE, the senior secured credit facility and subordinated revolving credit facility being in full force and effect and funds being available there under on the Distribution Date, and the other conditions described in the Information Statement included in the Form 10. GGP and Rouse Properties fully expect all conditions to the spin-off will be satisfied on or before the Distribution Date. However, in order to ensure that GGP satisfies its remaining REIT taxable income distribution requirements for 2011, in the event the conditions to the spin-off are not satisfied on or before the Distribution Date, GGP will not distribute the shares of Rouse Properties common stock on January 12, 2012, but will instead pay a special cash dividend on Tuesday, January 17, 2012, to GGP's stockholders of record as of the close of business of the NYSE on Friday, December 30, 2011.

FORWARD-LOOKING STATEMENTS

This press release contains "forward-looking statements" within the meaning of federal securities laws, including the timing of and benefits resulting from the separation of GGP and Rouse Properties, and similar statements concerning anticipated future events and expectations that are not historical facts. GGP cautions that these statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including changes in market conditions, unanticipated developments that prevent, delay, alter the terms of, or otherwise negatively affect the spin-off, and other risk factors that Rouse Properties identifies in its Form 10 or that GGP identifies in its most recent quarterly report on Form 10-Q. Any of these factors could cause actual results to differ materially from the expectations expressed or implied in this press release. GGP undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

FINANCIAL INFORMATION

This press release contains certain financial information about Rouse Properties, including core net operating income which is a non-GAAP financial measure. For additional information, including a reconciliation of core net operating income to its most directly comparable GAAP measure, see the Form 10.

ABOUT GGP

GGP is the second largest shopping center owner in the United States. GGP has ownership and management interests in 167 regional and super regional shopping malls in 42 states comprising approximately 169 million square feet. A publicly traded real estate investment trust, GGP is listed on the New York Stock Exchange under the symbol GGP.

ABOUT ROUSE PROPERTIES

The Rouse Properties portfolio will consist of 30 regional malls in 19 states comprising approximately 21 million square feet. Information about Rouse Properties can be found at www.ggp.com.

SOURCE General Growth Properties