Blackstone Funds Exit General Growth Properties

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Blackstone Group L.P. (NYSE:BX) plans to sell its 2.5 percent stake in General Growth Properties Inc (NYSE:GGP) in a secondary offering.

General Growth

The private-equity firm, The Blackstone Group L.P. (NYSE:BX), which owns the Hilton Hawaiian Village Waikiki Beach Resort as part of its Hilton Worldwide portfolio, plans to exit its investment of Ala Moana Center owner General Growth Properties Inc (NYSE:GGP) by selling off 23.4 million shares.

General Growth is the second-largest mall owner in the United States. Its portfolio is comprised of 124 regional malls in the United States and 18 malls in Brazil.

Citigroup Inc. (NYSE:C) will act as sole underwriter of Blackstone’s offering. The company has filed a shelf registration statement (including a prospectus) and a preliminary prospectus supplement relating to this offering with the SEC. General Growth Properties will not receive any proceeds from the sale of shares in this secondary offering.

Blackstone Group L.P. (BX) Agreed to Invest in General Growth Properties Inc (GGP)

In August 2010, The Blackstone Group L.P. (NYSE:BX) agreed to invest about $500 million for shares in General Growth Properties Inc (NYSE:GGP) once it emerged from Chapter 11 bankruptcy protection. An investor group comprised of Canadian property manager Brookfield Asset Management Inc., The Fairholme Fund and William Ackman's Pershing Square Capital Management had agreed to provide up to $8.5 billion in capital to finance General Growth's exit from bankruptcy.

According to some analysts, a surge in the General Growth Properties Inc (NYSE:GGP) ’s shares and rising property valuations since 2010 may have prompted Blackstone to decide it was a good time to sell.

The Blackstone Group L.P. (NYSE:BX)’s selling will entirely clean out its portfolio ownership in General Growth Properties Inc (NYSE:GGP). In a filing with SEC, Blackstone announced that it plans to sell its shares in General Growth it holds in four funds. Blackstone’s plans to exit in an underwritten public offering may have a significant dividend ramification.

General Growth is a real estate investment trust (REIT), where it distributes almost all of its income via dividends to its shareholders. The REIT’s dividend yield is only 2.1 percent. Many REIT's have performed admirably well, and many of the dividends have gone from high-yield to simply expensive.

Shares of General Growth Properties Inc (NYSE:GGP) Properties fell 52 cents, or 2.2 percent, to $22.81 in afternoon trading on Tuesday. The stock has traded between $15.85 and $23.33 over the last year. The Blackstone Group L.P. (NYSE:BX) shares rose 40 cents to $22.89.

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The post above is drafted by the collaboration of the Hedge Fund Alpha Team.

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