General Growth announces $9.75 billion commitment for Rouse acquisition

By Paul A. Harris

St. Louis, Aug. 20 - General Growth Properties Inc. has obtained $9.75 billion of committed financing to fund its $7.2 billion acquisition of The Rouse Co., officials said in a conference call Friday.

The transaction is expected to close in the fourth quarter.

General Growth will assume about $5.4 billion of Rouse's debt in the largest-ever acquisition of a real estate investment trust.

The financing will be comprised entirely of floating-rate debt, according to General Growth chief financial officer Bernie Freibaum, who said the company has the ability to do swaps.

The average interest rate will be in the Libor plus 225 to 275 basis points range, Freibaum added on a conference call Friday. The majority of the debt will have a term of three years, with some four-year debt included as well.

Shareholders of The Rouse Co. will receive $67.50 per share in cash.

Lehman Brothers, Credit Suisse First Boston and Wachovia Bank served as advisers for General Growth, according to a company news release.

With the acquisition of Columbia, Md.-based Rouse, General Growth will add properties including Boston's Fanwell Hall Marketplace, Atlanta's Perimeter Mall and Houston's The Woodlands Mall to its portfolio.

In addition to the acquisition, General Growth said it intends to refinance $2 billion of unsecured credit.

Chicago-based General Growth is the second largest shopping mall owner in the United States.

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