WORLD PROPERTY CHANNEL ®

Chicago-based General Growth Properties Inc. (NYSE:GGP), which already has enough money to easily survive its expected Chapter 11 exit in October, has received a $500 million equity investment from an unexpected source.

Reuters reports the Teacher Retirement System of Texas, which oversees $96.7 billion of assets, expects to buy shares of a reorganized General Growth at $10.25 each, according to a joint statement issued Monday.

General Growth said the investment will provide additional liquidity and does not include a stake in a new company to be spun off to shareholders.

General Growth Stock Chart

The investment supplements a $6.55 billion equity investment that General Growth accepted in May from Canada's Brookfield Asset Management Inc (BAMa.TO), Fairholme Funds Inc and Pershing Square Capital Management LP to help fund its exit from Chapter 11.

In a prepared statement, General Growth CEO Adam Metz said his company, the second largest mall owner in the U.S., had already obtained sufficient capital commitments to emerge from Chapter 11 but the Texas fund investment offered "attractive" terms.

"We continue to make excellent progress with our restructuring plan and are well on our way to exiting Chapter 11 by October," Metz said.

General Growth owns or has stakes in more than 200 malls, including Faneuil Hall in Boston and Harborplace in Baltimore.

Faneuil Hall Marketplace

The company filed for protection from creditors in April 2009 after being unable to refinance maturing debt. It has since been slashing debt and obtaining equity investments to enable it to operate outside Chapter 11.

In a court filing, General Growth said it has already reorganized a majority of its operating entities, restructuring $14.71 billion of secured mortgage debt and obtaining confirmed plans for 262 affiliates.

Separately, General Growth said it agreed for Jones Lang LaSalle Inc (JLL.N) to take over its third-party leasing and management responsibilities for 18 malls, including the Burbank Town Center in California and The Shops at Georgetown Park in Washington. Terms were not disclosed.

According to Reuters, the Texas fund investment requires court approval, expires on Dec. 31, 2010, unless extended, and has a $15 million breakup fee, the court filing shows.

UBS Investment Bank, Miller Buckfire & Co and the law firm Weil Gotshal & Manges LLP advised General Growth on the Texas fund investment.

General Growth shares rose 28 cents to $13.99 at the close of trading today on the New York Stock Exchange.

Please see related Real Estate Channel Postings:

• Fitch Cites Brookfield's Strong Liquidity in Pending Deal with General Growth Properties, May 11, 2010
• Bankruptcy Court Approves Changes in Bidding That Could Bring General Growth Properties Higher Offers, May 10, 2010
• General Growth Properties' Q-1 Sales Improve but Net Operating Income Down 3% from 2009 Period, May 10, 2010
  
• Simon Property Group Pulls Plug on Plan to Buy Rival General Growth Properties, May 7, 2010
  
• Simon Offers New Buyout Plan but GGP in No Rush to Accept, April 26, 2010
• GENERAL GROWTH UPDATE: Chicago Mall Developer Sets Up Bidding War Plan in New Bankruptcy Court Filing, April 2, 2010
• GENERAL GROWTH UPDATE: Two Largest Creditors Agree to Hand out Almost $4B to Help Mall Owner Exit Bankruptcy, March 9, 2010
• General Growth Properties Plans to Exit Bankruptcy by Splitting Company in Half, Feb. 24, 2010
• General Growth Not Biting at Simon's $10 Billion Apple, Feb. 17, 2010
• General Growth's Fresh Funding Lifts 96 Properties Out of Bankruptcy Protection With 16 Left to Save, Jan. 25, 2010
• General Growth's Chapter 11 Filing Called Largest in U.S. Retail Bankruptcy History, April 17, 2009
• General Growth Properties Stock Price Rise Puzzles Wall Street, April 7, 2009
• Fourth General Growth Properties Mall Seized, March 23, 2009
• General Growth Wins Breather but Hedge Fund Manager Predicts Bankruptcy Filing Coming, March 17, 2009
• Clock Ticking on Bankruptcy-Saving Deal for General Growth Properties and Subsidiary, March 12, 2009
• General Growth Properties' Piggy Bank is Low as Debt Piles Up, Feb. 24, 2009
  
• General Growth Properties Dumps 3 Trophy Retail Centers in Public Marketplace, Dec. 22, 2008

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