CHICAGO – Bill Ackman sold all of his shares in General Growth Properties Inc., the second-largest U.S. shopping-mall owner, marking the end of one of the hedge-fund manager’s most profitable investments.
General Growth, which owns Rhode Island’s Providence Place Mall, bought back about 28 million shares from Ackman’s Pershing Square Capital Management LP for $556 million, the Chicago-based real estate investment trust said Monday in a statement. The hedge-fund firm, which in September sold 25 million shares for $500 million, no longer holds any common stock, the company said.
Ackman, 47, helped rescue General Growth from near-collapse by pushing it to file for bankruptcy in 2009, and was part of an investor group in its subsequent reorganization. The effort “turned $60 million into $1.6 billion,” the hedge-fund manager told Bloomberg News in 2011, and contributed to his flagship fund’s net return of 29 percent in 2010.
“He’s found an efficient way to exit a fairly sizable position,” said Cedrik Lachance, an analyst with Green Street Advisors Inc., an REIT research firm based in Newport Beach, Calif. “Ackman was a really important investor around the time of the bankruptcy and was a key player in helping the company come out of bankruptcy in 2010.”
Carolyn Sargent, a spokeswoman for New York-based Pershing Square at Rubenstein Associates Inc., said Monday that she didn’t immediately have a comment on the transaction.
General Growth filed the largest real estate bankruptcy in U.S. history in April 2009 after amassing $27 billion in debt that it was unable to refinance because of the financial crisis and collapse of the commercial mortgage-backed securities market. The company’s restructuring plan provided a full recovery for creditors and a recovery for shareholders, which is rare in a bankruptcy reorganization.
Pershing Square was in an investor group including Brookfield Asset Management Inc. and Bruce Berkowitz’s Fairholme Capital Management LLC that committed more than $8 billion to bring General Growth out of Chapter 11.
Ackman and General Growth didn’t always agree. The investor campaigned for the REIT to put itself up for sale in 2012, a move the company rejected. Ackman pushed for General Growth to explore a takeover by Simon Property Group Inc., the largest U.S. mall owner, which never occurred.
He sold warrants to buy shares of General Growth to Brookfield, the company’s largest shareholder, as part of an agreement that ended his quest to have the mall owner sell itself, according to a regulatory document filed in January 2013.
General Growth is a much different company today than when it filed for bankruptcy. As part of the exit, it spun off Howard Hughes Corp., an owner of master planned communities and other properties. Ackman is chairman of the Dallas-based company and Pershing Square is its second-largest investor, according to data compiled by Bloomberg.
In 2012, General Growth spun off 30 retail properties into a publicly traded company, Rouse Properties Inc., so it could focus on its better-performing centers.
General Growth shares have climbed 3.2 percent in the past 12 months and are up about 60 percent since the company’s exit from bankruptcy.
The company used “available liquidity” to fund the purchase of Pershing Square’s shares, according to Monday’s statement.
“It’s a good thing,” Alexander Goldfarb, an analyst with Sandler O’Neill & Partners LP in New York, said in an interview. “This settles up and neatly separates the turnaround from where the company is today.”
PBN's annual Book of Lists has been an essential resource for the local business community for almost 30 years. The Book of Lists features a wealth of company rankings from a variety of fields and industries, including banking, health care, real estate, law, hospitality, education, not-for-profits, technology and many more.