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General Growth Buys Warrants From Blackstone, Fairholme

General Growth Properties Inc. (GGP), the second-largest U.S. owner of shopping malls, purchased $633 million of warrants to buy the company’s shares from Blackstone Group LP (BX) and Fairholme Funds Inc.

The warrants were exercisable into about 52 million shares at a weighted average exercise price of $9.37, the Chicago-based real estate investment trust said today in a statement. Blackstone, based in New York, and Bruce Berkowitz’s Fairholme no longer hold warrants in the company.

Blackstone and Fairholme acquired the warrants after investing in General Growth as part of the company’s 2010 exit from bankruptcy. The sale leaves Brookfield Asset Management Inc. (BAM/A) as the sole holder of the company’s outstanding warrants, after another member of the investor group, Bill Ackman’s Pershing Square Capital Management LP, sold its share to the Toronto-based investment firm.

General Growth has decided not to buy the Pershing warrants from Brookfield, according to today’s statement. Brookfield, the company’s largest shareholder, holds warrants for about 83 million common shares at an average exercise price of $9.53, the company said.

The shares closed today at $19.53, down 0.8 percent. They have gained 22 percent in the past 12 months.

Blackstone remains a holder of General Growth’s common stock, holding about 41.4 million shares, according to data compiled by Bloomberg.

The REIT, the largest U.S. mall owner after Simon Property Group Inc. (SPG), filed for bankruptcy in 2009 after weighing itself down with $27 billion in debt and was unable to refinance because of the financial crisis.

To contact the reporter on this story: Brian Louis in Chicago at blouis1@bloomberg.net

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net

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