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by way of example, lets assume you currently hold 10,000 shares of ggp. once the por is approved (assumed to be tomorrow at the scheduled hearing) and ggp emerges from bk (assumed to be monday, nov. 8) your old ggp shares will be composed of the following:

1 share of new ggp for each share of old ggp that you owned. i.e. you would receive 10,000 shares in the newly emerged general growth properties.

.09873 shares of hhc (howard hughes corporation) for each share of old ggp that you owned. i.e. you would receive 983 shares of hhc stock.

the 10,000 shares of old ggp which you owned would be cancelled in exchange for the above.

it is my belief that the $10.50 value on the new ggp and the $5.00 value on the hhc stock was a floor value placed on each of these stocks when brookfield, fairholme, and pershing agreed to provide their multi-billion dollar funding package in exchange for stock in the new companies. that does not necessarily mean that the new stock will be issued at those prices.

general growth negotiated with these entities (and texas teachers retirement fund) that IF the post emergence stock offering was placed at values greater than the $10.50 and $5.00 amounts that general growth could claw back up to about $2.5 billion in stock that pershing, fairholme, brookfield and texas teachers had received, thereby reducing the percentage ownership these entities would have in the new ggp and hhc companies.

now to your question about value. it is again my belief that when the underwriters do the ipo of the new ggp and hhc stock (which i would assume would be on monday the 8th) that those shares could be offered at an amount greater than the floor price. if that is the case there will be upside beyond the presumed $15.50 floor. if the stock is offered at the floor price and there is no upward movement upon issuance, then today's price of around $17/share would "lose" about $1.50/share.

i've thought all along that the stock would issue above the floor price and that might be why you are seeing the stock trading above that level. this has been one of the tightest lipped bankruptcy processes i have seen. there has been little to no leakage of inside information regarding the process ahead of formal announcements. therefore i believe that any trade above the floor is being done on the speculation that the offering will be done at a price greater than the floor value.

one other point regarding the hhc stock. it will be priced to reflect an approximately 10 for 1 reverse split (the .0983 per share calculation). therefore, the $5.00 floor needs to be re-priced to $50.86 share but remember you are getting less shares.

the time to play this stock in the last few months was during the runup over the simon takeout offers. the price climbed above $18/share. after the simon bid was rejected, the stock fell into the $12's. some good money was made by those who felt (correctly) that ggp's management would reject simon's bid as a low-ball offer for the quality of assets held by ggp. if you had sold your 10k shares in the $17.50 to $18.00 range anticipating the rejection of simon's bid and bought back in someplace in the high $12's there was a good $50k to be had.

i don't think the speculation now is worth the bet. if you were to have sold today expecting to get back in at $15 for a quick $2/share uptick and the new stock ends up being offered above the floor price you would find yourself chasing it.

i've been in since march '09 and got my shares at an average of $.039/share. am currently sitting on about a 4400% gain and am just happy to let this emerge and see how it plays out.

40% of my holdings are in ira's and the remaining 60% is in a taxable account. if the stocks spike on emergence i might trade my ira shares so as not to incur capital gains. even though there is uncertainity about who the new ceo will be and what management team will be put into place upon the selection of the new ceo i believe there will be a lot of interest in this stock (mainly the new ggp as opposed to the hhc stock). the new ggp will be a reit and any reit indexes will be obligated to pick up shares of ggp to properly reflect ggp's inclusion in the reit universe of stocks. hhc will not be a reit and will probably be 3-5 years from reaching its stride so the interest might be limited to those who truly are looking for a long-term play with a lot of potential upside.

if ggp is not a $30 stock by sometime during 2013 i will be very surprised but then again, the last 2 years have provided more than enough surprises to last most people a lifefime.
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