‘Trophy properties’ part of deal

BALTIMORE – General Growth Properties Inc., a Chicago-based developer of regional shopping malls, is buying the Rouse Co., a pioneer of entertainment mall retailing whose properties include Boston’s Faneuil Hall Marketplace, for about $7.2 billion in cash.

The deal announced Friday will provide General Growth with more leverage in negotiations with top retailers and give it some of the nation’s premier mall sites, including the Fashion Show Mall on the Las Vegas Strip.

“They picked up some trophy properties,” said Malachy Kavanagh, a spokesman at the International Council of Shopping Centers. Faneuil Hall and Fashion Show Mall, “attract well over 1 million people a month.”

With the acquisition, General Growth will own or manage a total of 225 malls. That would make it a closer second rival to Simon Property Group Inc., which operates 246 malls across the country, Kavanagh said.

General Growth owns NorthTown Mall and Spokane Valley Mall, in Spokane, and Silver Lake Mall, in Coeur d’Alene.

The board of Columbia, Md.-based Rouse has approved the transaction, which is subject to shareholder approval. General Growth also will assume $5.4 billion in Rouse debt. The deal is expected to close in the fourth quarter of this year.

“The combination of Rouse and General Growth seems like a big boost to General Growth and a nice buyout for Rouse shareholders, where debt ratings recently were on the rebound,” said Richard Hastings, an analyst at Bernard Sands, a New York-based retail credit company.

General Growth will pay $67.50 per share, a 33 percent premium to Rouse’s Thursday closing price and nearly 25 percent more than Rouse’s stock 52-week high of $53.97.

Shares of Rouse stock soared almost 32 percent, or $16.04, to close at $66.65 a share on the New York Stock Exchange. But investors’ worries about the amount of debt General Growth was assuming pushed down its shares by almost 5 percent, or $1.54, closing at $30 on the NYSE.