Ala Moana Center, Ward Centers to be separately owned

By Howard Dicus - bio | email

HONOLULU and NEW YORK (HawaiiNewsNow) - A federal bankruptcy judge in New York has approved a reorganization for General Growth Properties that will split it into two companies.

Emergence is tentatively scheduled for Nov. 8. The company plans to sell new stock to try to raise $2.25 billion in new capital.

Chicago-based General Growth is the nation's second largest owner of malls, and will own 185 malls nationwide. It owns Ala Moana Center and Hilo's Prince Kuhio Plaza and manages several Hawaii malls owned by others.

The second company will focus more on other kinds of development. It will own Victoria Ward Ltd., which in turn owns Ward Warehouse, Ward Centers, and a great deal of valuable land in the blocks mauka of those shopping centers and has an ambitious redevelopment plan. The second company will also own the parking structure next to Nordstrom's where a high-rise is planned.

The second company will be called Howard Hughes Corp., named for the late tool company owner, aircraft manufacturer and moviemaker who was also the man behind the massive Summerlin development in the Las Vegas area. Hughes' development company was acquired by The Rouse Co., developer of planned communities that created Columbia, Md. Rouse was then acquired by General Growth. That was an $11 billion leveraged acquisition and the source of almost half of all General Growth's debt.

General Growth was driven into bankruptcy after the Wall Street financial calamity of 2008 when credit markets seized and it could not refinance the massive debt it had taken on - $29 billion - as part of an aggressive expansion campaign.

Its reorganization is being financed largely by Brookfield Asset Management, which will wind up owning two thirds of the company, ending long-time control of General Growth by the Bucksbaum family of Chicago. The company will still carry debt of $20 billion.

Even in recession some of its properties remained profitable, with Ala Moana Center, the largest mall in the Pacific, among the most profitable of all, and when the company offered some properties for sale during bankruptcy it specified Ala Moana Center was not for sale.

The credit crisis tabled development plans for Victoria Ward Limited, which had intended to replace blocks of commercial and industrial buildings with two rows of high-rise condos along tree-lined boulevards from Kapiolani Blvd. to Ala Moana Blvd., displacing dozens of small businesses.

Commercial real estate sources in Honolulu said Thursday evening that some form of that plan may yet be advanced, especially now that a separate company undistracted by managing hundreds of malls will be working on it.

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