General Growth Properties Inc. was told to use a three-appraiser process to value a large community in Nevada, but a judge added he would not let it delay the No. 2 U.S. mall owner’s exit from bankruptcy.
The value and payout could be in the hundreds of millions of dollars and affect General Growth’s plan to exit bankruptcy, tentatively planned for the third week in October.
Judge Allan Gropper directed General Growth to follow a process set up under the original contract written more than 20 years ago, to determine the final payment for Summerlin.
“It seems to the court that it might be important for the debtors to follow the contract as much as possible,” Gropper said on Thursday, following a hearing.
But the judge said General Growth could ask for an estimation from the court if the appraisal process became bogged down.
General Growth inherited Summerlin, a master-planned community, when it bought Rouse Corp in 2004. Rouse purchased the 22,500 acres from Hughes Corp in 1996.
Summerlin today is home to about 100,000 residents in 40,000 residences. It has 25 public and private schools, golf courses, parks, shopping centers and medical facilities.
There are about 7,000 acres of undeveloped land left, according to court papers. Under the original agreement between Rouse and Hughes, a final payment was to be based on half the value of the land remaining as of December 2009. General Growth’s bankruptcy filing in April 2009 put that process and payment on hold.
The original contract calls for the final payment to the heirs of the stockholders of Hughes Corp to be determined by three appraisals — one made by an appraiser hired by the owner, the other by Hughes and the final by one picked by the other two appraisers.
The value that was furthest from the median would be thrown out, and the final value would be determined by the mean of the the remaining two.
Each side is currently working on an appraisal.
General Growth has argued that a third appraiser, starting from scratch, may take too long and said the court should estimate the value after hearing from each sides’ appraiser.
