General Growth Properties Inc., the No. 2 mall operator in the United States, has warned that an ongoing slump in retail sales, combined with the credit market lockdown, has pushed the company to the brink of bankruptcy.The inability to secure credit is a big reason why the company is facing this problem. Should the company declare bankruptcy, expect its properties to be snatched up by other mall operators, including Westfield (which operates the Garden State Plaza down the road from Paramus Park), Simon, and Vornado.
Chicago-based General Growth Properties said in an SEC filing late Monday that it has $900 million of property secured debt and $58 million of corporate debt coming up for renewal by Dec. 1. It also faces another $3.07 billion in debt that matures in 2009.
But "given the continued weakness of the retail and credit markets," the mall operator fears it may not be able to refinance its loans at lower rates to meet its short-term cash needs.
Shares of General Growth Properties (GGP) tumbled 66% to 46 cents on Tuesday.
General Growth announced in August that it might sell some assets to raise capital for servicing its debt. The company operates more than 200 malls -- including the Paramus Park Mall in New Jersey, Cumberland Mall in Atlanta, Water Tower Place in Chicago and the Glendale Galleria in California -- in 44 states.
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Wednesday, November 12, 2008
Number Two Mall Operator Mulling Bankruptcy
General Growth Properties, which operates more than 200 malls across the country, including the Paramus Park Mall in Bergen County, New Jersey, is mulling bankruptcy.
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