GGP Announces Cash Dividend for 2011 and Cash Repayment of $570 Million of Obligations
November 10 2010 - 6:00AM
Business Wire
The Board of Directors of General Growth Properties Inc.
(NYSE:GGP) today announced two major initiatives and its approval
for the sale of the Gateway Overlook Shopping Center in Columbia,
Maryland.
Cash Dividends
Effective 2011, GGP shareholders will have the option to elect
to receive regular dividends in cash or shares pursuant to a
dividend reinvestment program (“DRIP”). While no dividends have
been declared, the company expects to pay a regular quarterly cash
dividend estimated at approximately $0.10 per share ($0.40 cents
annually) beginning in the first quarter of 2011.
GGP further announced it has received commitments from its major
shareholders to participate in the DRIP. Certain sponsors of the
company’s bankruptcy emergence plan (Brookfield Asset Management
Inc., Fairholme Funds, Pershing Square and Blackstone) have all
agreed to subscribe for shares under this program, subject to
regulatory and other requirements, which will enable the company to
pay a larger cash dividend to other shareholders while maintaining
liquidity to support its operations.
In addition, a one-time dividend, in relation to the company’s
2010 annual income, which is required to be paid to maintain REIT
status, is also anticipated to be paid during the first quarter,
and prior to the first quarter’s expected regular dividend. This
one-time dividend will be 90% in shares and 10% in cash and will
not be subject to the DRIP.
Repayment of Obligations
The company also announced today it has made a final
determination to pay the $220 million settlement owing to
Hughes Heirs in cash. As previously announced by the company on
September 20, 2010, the company had an option to pay this amount in
cash or shares of the company’s common stock. Given a number of
positive events that have occurred over recent months, and given
the capital anticipated to be available to the company which was
not foreseen when the emergence plan was first contemplated, the
board has determined to pay the $220 million Hughes Heirs
claim in cash. The company also intends to repay the
$350 million Pershing Square note in cash, and to cancel its
option to put 35 million shares to Pershing Square at $10.00 per
share, upon closing of the company’s previously announced equity
offering.
These two transactions will enable the company to avoid the
issuance of upwards of 50 million common shares that otherwise
might have been issued. These actions will reduce potential
dilution by approximately 6%, enhancing shareholder value for all
common shareholders, while leaving the company ample room to carry
out its investment programs to re-energize GGP.
Sale of Gateway Overlook
As part of its continuing initiative to sell non-core assets,
the Board of Directors has approved an agreement to sell the
Gateway Overlook Shopping Center in Columbia, Maryland, for a gross
sales price of $90,050,000. Upon closing, which remains subject to
certain limited conditions, the company expects to reduce its debt
by approximately $55,000,000 and generate excess proceeds of
approximately $35,000,000.
Bruce Flatt, chairman of GGP commented, “Our goal is for GGP to
run the number one retail shopping center business in America, and
ensure we make prudent capital decisions to drive shareholder
value. We are fortunate the cash position in GGP exceeds that which
was expected several months ago, enabling the company to take
advantage of this one-time opportunity pursuant to its
pre-emergence investment agreements to retire these obligations
without having to issue shares at prices well below current market
value. We are also pleased to return to paying substantial cash
dividends more quickly than had previously been planned, achieving
an important milestone for the new GGP.”
ABOUT GGP
The Company currently has ownership interest in more than 180
regional shopping malls in 43 states. The Company’s portfolio
totals approximately 200 million square feet of retail space and
includes more than 24,000 retail stores nationwide. The Company’s
common stock is currently traded on the New York Stock Exchange
under the symbol GGP.
FORWARD LOOKING STATEMENTS
This press release contains forward-looking statements. Actual
results may differ materially from the results suggested by these
forward-looking statements, for a number of reasons, including, but
not limited to, our ability to emerge from bankruptcy pursuant to
our approved plan of reorganization, our ability to refinance,
extend, restructure or repay our short and intermediate term debt,
our substantial level of indebtedness, our ability to raise capital
through equity issuances, asset sales or the incurrence of new
debt, retail and credit market conditions, impairments, our
liquidity demands and retail and economic conditions. Readers are
referred to the documents filed by General Growth Properties, Inc.
with the Securities and Exchange Commission, which further identify
the important risk factors which could cause actual results to
differ materially from the forward-looking statements in this
release. The Company disclaims any obligation to update any
forward-looking statements.
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