This isn’t a huge deal in terns of the number of shares taken off the market (~3%). With the large debt load GGP did come out of 11 with, I am in favor of anything that reduces that debt. GGP is looking at ~$500M annually in interest cost savings from actions taken to date and another $2.3B will add another ~$150M (assuming 6%-7% interest). Since GGP is FFO and NOI positive, that saving drops right to the bottom line, good for shareholders.
Given the debt structure they came out of 11 with, one has to get the impression Sandeep is determined to have a REIT with a pristine balance sheet….I got no problem with that at all
General Growth Properties, Inc. (NYSE: GGP) (“GGP” or the “Company”) today announced it has purchased for cancellation approximately 30.6 million shares of its common stock at a purchase price of $15.95 per share, investing a total of $487.9 million. The acquisition was completed through private purchases.
The Company also announced its intent to repay $339 million of corporate recourse debt prior to June 30, 2011. The debt carries an average interest rate of 5.9% and has an average maturity term of 1.8 years. Following the repayment of these facilities, GGP will be debt-free at the parent-company level, with the exception of $206 million of trust-preferred securities due in 2036.
“Since the beginning of 2011, we have generated liquidity in excess of $2 billion from the sale of non-core assets, non-recourse asset financings and a new credit line. Looking forward, we expect to retire in excess of $2.5 billion of subsidiary and asset level debt by the end of 2013,” said Sandeep Mathrani, chief executive officer of General Growth Properties. “The best use of our capital is to balance between reducing near-term debt maturities and investing in higher return long-term investments that will continue to build net asset value in the business. Given the current value of our stock, the quality of our assets and the outlook for our cash-flow generation, we can think of no better long-term investment than in our own company.”