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General Growth Properties’ Acquisition Growth Strategy

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Sep. 24 2015, Updated 5:07 p.m. ET

Enhanced portfolio through acquisition

General Growth Properties (GGP) has a good track record of aggressive acquisitions that have enriched the quality of its portfolio. Since 1993, the company has expanded its portfolio dramatically by acquiring many existing properties and constructing new malls. We’ll discuss some of GGP’s acquisitions in this part of the series.

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Acquisition strategy

In 1995, GGP acquired Homart Development Company, the mall development subsidiary of Sears, in a transaction valued at $1.85 billion. Another major acquisition came in 2004, when GGP acquired The Rouse Company, including its land development subsidiary, Howard Hughes Corporation, for a deal worth $12.6 billion. At the time, this transaction was one of the largest retail real estate deals in American history.

Before its acquisition by GGP, The Rouse Company had stakes in 37 malls and other retail properties totaling 40 million square feet, among them some of the best-known retail sites in the country, including Chicago’s Water Tower Place and Manhattan’s South Street Seaport. With this acquisition, GGP became the nation’s second-largest mall operator.

In April 2015, GGP acquired the Crown Building in New York City, a 26-story retail and office property. The Crown Building deal was worth $1.775 billion and was partially funded by $1.25 billion secured debt. The property is now occupied by tenants like Bulgari, Piaget, and Mikimoto and makes up approximately 100,000 square feet of lease area.

REITs (real estate investment trusts) have to look for prolific acquisition of properties continuously to boost their bottom-line. Major competitors of GGP like Simon Property Group (SPG), Macerich Company (MAC), and CBL & Associates Properties (CBL) are also aggressive acquirers of properties constantly seeking to enhance their portfolios.

GGP makes up 4.20% of the holdings of the iShares Cohen & Steers REIT ETF (ICF).

In the next part of this series, we’ll delve into GGP’s strategy to increase shareholders returns.

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