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General Growth Completes Spinoff of 30 Retail Centers Into Rouse

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Jan. 12 (Bloomberg) -- General Growth Properties Inc. completed its spinoff of 30 retail properties into a publicly traded company, allowing the second-largest U.S. mall owner to focus on better-performing centers.

The portfolio was spun off to shareholders as Rouse Properties Inc., a real estate investment trust based in New York, Rouse said today in a statement. The name of the new REIT comes from General Growth’s $11.3 billion purchase of commercial-property developer Rouse Co. in 2004.

General Growth, based in Chicago, divested itself of the malls to concentrate on properties with higher rents and tenant sales and to reduce debt. Rouse’s malls are either the main shopping center in smaller U.S. cities or are second-tier properties in major markets.

“It’s not a troubled portfolio,” Craig Guttenplan, an analyst at CreditSights Inc. in London, said in a telephone interview before the spinoff was completed. “It’s just properties with less growth potential.”

Rouse’s 30 malls are 88 percent occupied and generate sales of about $280 per square foot, Nathan Isbee, an analyst at Stifel Nicolaus & Co., wrote in a Nov. 11 report. General Growth had tenant sales of $471 a square foot on a trailing 12-month basis as of Sept. 30, and a 92.7 percent occupancy rate for its regional malls, the company said on Nov. 9.

Rouse plans to spend $200 million on property redevelopment by the end of 2015 to boost net operating income, the company said in a regulatory filing last month.

Rouse was expected to have about $1.16 billion of debt with a weighted average interest rate of about 5.6 percent at the time of the spinoff, General Growth said on Dec. 20.

Andrew Silberfein took over as chief executive officer of Rouse on Jan. 2, according to a regulatory filing. Silberfein previously was executive vice president of retail and finance at Forest City Ratner Cos., where he worked since 1995.

Simon Property Group Inc., based in Indianapolis, is the only U.S. mall owner larger than General Growth.

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

To contact the editor responsible for this story: Daniel Taub at dtaub@bloomberg.net

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