Hedge fund buys $9.3 million stake in General Growth

LAS VEGAS, Nevada -- A New York-based hedge fund bought an interest in up to 20 percent of mall giant General Growth Properties Inc. -- a company that had a market capitalization of nearly $9 billion as recently as February -- for just $9.3 million in cash.

Pershing Square Capital Management disclosed the purchase Tuesday in a filing with the U.S. Securities and Exchange Commission.

It's the first vote of confidence in General Growth in several months, but by itself won't dig it out from about $900 million in debt that comes due by December on Fashion Show Mall and Shoppes at Palazzo on the Strip.

General Growth shares have lost more than 98 percent of their value this year and were hovering beneath $1 until the Pershing announcement boosted them to as high as $2. The shares closed Tuesday at $1.35, up 36 cents, or 36 percent, on the New York Stock Exchange.

Pershing acquired 7.5 percent of General Growth shares for $9.3 million and an interest in 12.4 percent through, "total-return swaps," according to Bloomberg.com.

In addition to Fashion Show and Shoppes at Palazzo, General Growth owns the Grand Canal Shoppes at The Venetian, Boulevard and Meadows malls and Summerlin Centre.

Brooklyn-based investor Reggie Middleton was one of the first to raise red flags about General Growth's debt problems, which can be traced back to an $11.3 billion purchase of Rouse Co. in 2004.

Middleton said Pershing might have gotten a steal if General Growth management can somehow right the ship and refinance the debt due Friday plus $3 billion next year.