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January 18, 2011 5:13 PM

S&C, Willkie Lead as Fairholme Cashes Out General Growth Stake

Posted by Tom Huddleston Jr.

Less than a year after getting involved in General Growth Properties, Inc.'s bid to escape bankruptcy, the Fairholme Fund investment firm announced Tuesday that it is selling its entire stake in the Chicago-based real estate investment trust.

The transaction, valued at $1.7 billion, calls for Fairholme to receive $15.10 per General Growth share--based on the mall operator's January 14 closing price--from the acquiror, Brookfield Asset Management Inc. Toronto-based Brookfield will pay just over $800 million in cash, along with $907 million in Class A limited voting shares.

Together with Pershing Square Capital Management, Fairholme and Brookfield were part of the effort to erase General Growth's roughly $7 billion in debt. In May 2010 a federal bankruptcy judge ruled that General Growth--one of the country's largest mall operators--could team with Brookfield and the other two investment firms in an $8.5 billion reorganization plan. The transaction is expected to close on or about January 25, 2011.

In its effort to cash out of its General Growth stake, Fairholme turned to Sullivan & Cromwell for legal counsel related to the sale and General Growth's restructuring. Sullivan & Cromwell's New York-based team was led by corporate partner Donald Crawshaw and restructuring partner Andrew Dietderich. Blake, Cassels & Graydon advised on Canadian law matters, and Seward & Kissel served as regulatory counsel on certain matters.

Willkie Farr & Gallagher, meanwhile, served as Brookfield's counsel in the transaction. Corporate partner and capital markets practice cochair Gregory Astrachan led the way, along with asset management partner Margery Neale and tax partner Henry Cohn. Joe Freedman is Brookfield's senior managing partner and counsel.

As The Am Law Daily previously reported, Sullivan & Cromwell and Willkie Farr also advised Fairholme and Brookfield, respectively, during the General Growth reorganization bid.

In August, private equity firm The Blackstone Group invested $500 million in General Growth, which owns such outlets as New York City's South Street Seaport and Boston's Faneuil Hall Marketplace. 

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