General Growth Properties Agrees to Purchase JP Realty

General Growth Properties Inc., the second-largest U.S. shopping mall owner, on Monday agreed to buy JP Realty Inc. for about $1.1 billion in cash, stock and assumed debt, adding 18 regional malls in the West.

JP Realty investors and limited partners will receive $26.10 in cash for each share, 6.8% above the closing price Friday. General Growth will pay $524 million in cash and assume $460 million in debt and $116 million of preferred shares, Chief Executive John Bucksbaum said.

The purchase comes two months after Chicago-based General Growth lost out in the bidding for mall owner Rodamco North America, which was sold for $5.3 billion. Analysts expected the company to look for other purchases. General Growth raised $345 million from the sale of stock in December in anticipation that it would be the winning bidder for Rodamco.

JP Realty, whose chairman and founder John Price recently was appointed as ambassador to the Republic of Mauritius, has a stake in 50 malls, strip shopping centers and warehouses with 15 million square feet of space.

Salt Lake City-based JP Realty’s properties are in Utah, Idaho, Arizona, Nevada, Washington, California, Wyoming, New Mexico, Colorado and Oregon. JP Realty’s largest property is the 1.17-million-square-foot Boise Towne Square mall in Boise, Idaho.

In California, JP Realty’s operations include the Visalia Mall in Visalia and Anaheim Crossing, a community shopping center in Orange County.

General Growth is controlled by the Bucksbaum family, which started building malls in the 1950s and owns 141 shopping malls in 39 states.

Shares of General Growth rose $1.02 to $43.22 on the New York Stock Exchange on Monday. JP Realty rose $2.10, or 8.6%, to $26.53, also on the NYSE, a sign some investors expect a competing offer for the business may emerge.

General Growth said it expects to generate a return of 10% during the first 12 months after the purchase is completed, scheduled in the second quarter.