General Growth Properties plunges on viability concerns
NEW YORK (Reuters) – Shares of General Growth Properties Inc (GGP.N) fell 73 percent on Tuesday after the second-largest U.S. mall owner expressed doubts that it could continue operating due to its looming near-term debt.
The Chicago-based retail property company has $1.13 billion in debt coming due, including $900 million in secured mortgage debt on the two of its Las Vegas shopping centers due on November 28 and $58 million of corporate debt due on December 1. It also faces another $3.07 billion due next year, the company said on Monday in a filing with the U.S. Securities and Exchange Commission.
"In the event that we are unable to extend or refinance our debt or obtain additional capital on a timely basis and on acceptable terms, we will be required to take further steps to acquire the funds necessary to satisfy our short term cash needs, including seeking legal protection from our creditors," the real estate investment trust said in the filing.
"Our potential inability to address our 2008 or 2009 debt maturities in a satisfactory fashion raises substantial doubts as to our ability to continue as a going concern."
Shares of General Growth Properties were down $1 at 37 cents in early morning trading on the New York Stock Exchange. About a year ago, the stock sold for as high as $51.24.
(Reporting by Ilaina Jonas and Helen Chernikoff, editing by Dave Zimmerman)
Why should someone be concerned about this? GGP owns or operates over 200 mall properties in the United States, making it the largest operators of shopping centers in this country. If they default, this might result in the temporary or permanant closure of those shopping centers at the height of the Christmas shopping season. They may have to file for bankruptsy or petition for a merger with another mall ownership company like Australia's Westfield or Indianapolis based Simon Associates. Simon has made some inroads according to rumor, but there is nothing in the pipline yet.
I am concerned for obvious reasons in that the mall I work at is owned by GGP. I have seen maintenance work deffered, hiring frozen, people being laid off, etc. We are undergoing a major renovation which I think is being funded outside of the company (Nordstroms), but I have to wonder if they would continue the work if the mall is closed. I don't have any illusions about what my future may hold. I got my paycheck a day early so I have to wonder if that has anything to do with what is going on. The end of the month may tell some things about what is going on.
God bless the people working at the other malls around the country. Lets hope this Christmas isn't too bad.