$$ China Investment Authority Acquires GGP/HHC Stake

• Posted by ToddSullivan
• on November 19th, 2010

We have wondered here for a long time if the BAM Fund that was designed to invest in distressed assets was going to be used for GGP. Guess it was.

CIC (China Investment Authority) filed a Form 3 in HHC and a Form 4 in GGP.

HHC:

(1)Stable Investment Corporation (“Stable”) and Best Investment Corporation (“Best”) hold a collective 99.499848% percentage ownership interest in Brookfield Retail Holdings III LLC (subject to a “carry interest” held by the managing member thereof), which owns 621,147 shares of the Common Stock of the Issuer. China Investment Corporation (“CIC”) is the parent of each of Stable and Best. Each of CIC, Stable and Best disclaim any beneficial ownership of the shares of Common Stock reported herein except to the extent of its respective indirect pecuniary interest therein.

(2) Stable and Best hold a collective 99.499848% percentage ownership interest in Brookfield Retail Holdings III LLC (subject to a “carry interest” held by the managing member thereof), which owns 982,036 warrants issued by the Issuer. CIC is the parent of each of Stable and Best. Each of CIC, Stable and Best disclaim any beneficial ownership of the warrants reported herein except to the extent of its respective indirect pecuniary interest therein.

(3) Each warrant is convertible, at the option of the holder thereof, at any time prior to seven years from the issuance of such warrant, into 1 share of common stock of the Issuer, at a price of $50.00, subject to certain adjustments in connection with dividends and certain other events. The warrants also provide each holder with a cash redemption right at a Black-Scholes-based formula value upon certain change in control events.

GGP:

CIC both acquired shares through the BAM venture and bought additional shares on the open market Tuesday the 16th.

So, let’s look at GGP now. We have large owners based in both Canada and China. Both owners are financially very sound and that will give GGP access to cheaper capital than the rest of the REIT industry through either access for outright acquisitions or for JV’s. They also now have a base in markets they have no presence in. GGP must now be looked at as not only a US Regional Mall owner but with the potential to be a very large International one.

BAM is already committed through its agreement w/GGP to use GGP as the vehicle for ANY regional mall project they do in N. America. Clearly CIC has interest in the company if they are buying shares on the open market.

Those valuing GGP today based on results while in Chapter 11 and solely focusing on that are just missing the boat…..almost entirely.

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