General Growth Properties Inc. said Tuesday it will pay $48 million to settle a lawsuit filed by Los Angeles real estate developer Rick Caruso for allegedly strong-arming tenants of its Glendale Galleria shopping center.
The settlement comes a little more than a year after a jury in California state court awarded Caruso Affiliated Holdings LLC $89.2 million in damages in the case. General Growth appealed the decision and will pay the settlement using a portion of the cash collateral it put up as security during the appellate process.
Caruso filed the suit in 2004, accusing General Growth of pressuring potential tenants to not sign on with his Americana at Brand development in Glendale, Calif. The $400 million lifestyle center opened last year across from the Glendale Galleria, in which General Growth is a 50 percent joint venture partner.
“Settlement allows us to put this matter behind us and focus on the company’s ongoing operations and strategic evaluations,” said General Growth chief executive officer Adam Metz.
The REIT said that it will reimburse another $5.5 million to its Glendale Galleria partner, Homart II, for costs related to the settlement.
The payment will partly reverse previously recorded expenses on General Growth’s balance sheet. The company said it will record an adjusted increase in funds from operations of 16 cents a diluted share in the fourth quarter of 2008 because of the reversal.
General Growth, which amassed large amounts of debt as it expanded its portfolio of shopping centers and other real estate assets, is trying to sell its three Las Vegas malls and mixed-use properties in New York, Boston and Baltimore to help meet a $900 million mortgage payment. Its lenders recently extended the deadline on that payment by two months to Feb. 12.