General Growth to form new REIT – source

By Ilaina Jonas

NEW YORK (Reuters) – General Growth Properties Inc plans to spin off 35 properties into a real estate investment trust, further reducing its holdings to only large regional malls, according to two sources familiar with the plans.

The assets going into the REIT consist of neighborhood strip malls, office properties and weaker regional malls that the company had planned to sell or return to lenders, the sources said.

It was unclear whether the REIT would be publicly traded.

A spokesman for Chicago-based General Growth, David Keating, declined to comment on the matter.

Eastdil Securities is handling the deal, the sources said.

A REIT is a real estate-linked company that can avoid paying U.S. corporate income taxes if it distributes at least 90 percent of its taxable income to shareholders.

General Growth emerged from bankruptcy in November and split into two companies: General Growth and Howard Hughes Corp .

General Growth retained ownership of the company’s regional malls and retail properties, while Dallas-based Howard Hughes Corp owned undeveloped mall projects, the master-planned community business and some office properties.

General Growth owned more than 180 regional malls. Chief Executive Sandeep Mathrani in April said he planned to trim that number to 150. The company now has about 169.

Shares of General Growth were off 17 cents, or 1 percent, at $16.33 in Friday afternoon trading. (Reporting by Ilaina Jonas; Editing by Lisa Von Ahn and John Wallace)