Firm buys Rouse in $12.6b deal

A Boston landmark changed hands yesterday, as the Rouse Company, the developer and owner of Faneuil Hall Marketplace, agreed to be purchased by General Growth Properties Inc. of Chicago.

A press release issued by the buyer said the price will be about $12.6 billion, with shareholders of the Rouse Co. receiving $67.50 per share in cash. The price includes $5.4 billion in existing debt.

The boards of directors of both companies approved the transaction, which General Growth in its release called a "merger agreement." It is expected to close in the fourth quarter of the year, subject to approval by Rouse shareholders.

Rouse, based in Columbia, Md., has 47 properties totaling 40 million square feet, including 37 regional malls. General Growth is the nation's second-largest owner, developer, and manager of regional shopping centers.

Rouse developed Quincy Market and Faneuil Hall Marketplace in a historic but underused section of Boston in the mid-1970s and pioneered other so-called regional centers around the country.

Rouse's portfolio also includes Providence Place in Rhode Island, Water Tower Place in Chicago, Fashion Show Mall in Las Vegas, and Park Meadows Mall in Denver.

"This is not a surprise to me in view of the continued trend of the consolidation not only of owners but in the service side of the real estate business," said Joe Fallon, a principal of Trammell Crow Co. in Boston, who was not involved in the deal.

"They get not only ownership but also income through continuing to manage," Fallon said of the prospective owners.

Carol Troxell, president of a company that owns three tenants at Faneuil Hall Marketplace, said the sale did surprise her -- though Rouse's steadily increasing stock price recently gave some indication.

"It happened overnight apparently," said Troxell, whose Rescor Companies Inc. owns Steve's Ice Cream Shop, Slugger's Dugout, and Kilvert & Forbes Bake Shop.

Troxell said that, because General Growth owns so many properties, she didn't expect any immediate change.

"I hope down the line they help us out with marketing programs," said Troxell, who has been at Faneuil Hall for two decades and recently signed new leases.

Troxell, who is also on the board of the Faneuil Hall Merchants Association, said the complex is 98 percent leased. Sales in Rouse's retail properties nationwide average $439 per square foot, and occupancy is 92 percent, according to General Growth.

Rouse was founded in 1939 and became a public company in 1956. Officials from Rouse and General Growth could not be reached for comment.

General Growth has ownership interests or management of 178 regional shopping malls in 41 states. It controls about 154 million square feet of retail space, including 16,000 retail stores.

"Industries in America always go through survival of the fittest, and consolidation is part of that process," said Fallon. "Real estate is not unlike other industries."

Both companies are traded on the New York Stock Exchange. Rouse stock closed on Thursday at $50.61 per share and was up at the end of yesterday to $66.65.

General Growth stock closed yesterday at $30 a share, down $1.54 for the day.

Thomas C. Palmer Jr. can be reached at tpalmer@globe.com.