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Mall owner bankrupt
Old 04-16-2009, 11:23 AM   #1
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Mall owner bankrupt

I wonder what this means to REITs and insurance companies that have a lot of their funds tied up in malls.

NEW YORK (Reuters) - General Growth Properties Inc, the second-largest U.S. mall owner, declared bankruptcy on Thursday in the biggest real estate failure in U.S. history.
Ending months of speculation, General Growth, along with 158 of its more than 200 U.S. malls, filed for Chapter 11 protection from creditors while it tries to restructure some of its debt. Its joint-venture properties and third-party management business were not included in the bankruptcy.

General Growth files for bankruptcy protection - Yahoo! Finance
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Old 04-16-2009, 11:28 AM   #2
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Not far from here, a new mall is undergoing foreclosure to the tune of nearly $200 million:

Hill Country Galleria faces foreclosure

Basically, they need to refinance an existing shorter-term construction loan (historically a common practice) and the capital markets have dried up.
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Old 04-16-2009, 11:45 AM   #3
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i don't think GGP was bankrupt, they defaulted on one loan tied to a mall. from what i've read most bond covenants say if you default on one bond it's an automatic default on other bonds
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Old 04-16-2009, 12:27 PM   #4
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This is a shame. I ran thru my records and confirmed I made more $$$ on GGP than any other stock except 1 - it is a significant reason why I am retired today. I had a very large position in them from 2001-2005, smaller positions for another couple years. I was always a bit leery after the Rouse acquisition, both for the higher resulting leverage and for all the non-core assets (office and residential) that came with the excellent malls.
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Old 04-16-2009, 12:48 PM   #5
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Looks like all the Gallerias, I think that is their brand.
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Old 04-16-2009, 02:27 PM   #6
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The biggest shopping center in Hawaii, Ala Moana is one of their properties also.

Anybody know what the impact will be to the stores?
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Old 04-16-2009, 05:21 PM   #7
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The malls continue to operate. This was a liquidity/debt problem as commercial loans are much shorter time frames. These malls have a plus 90% occupancy rate. They can sell off 1 or 2 prperties and emerge from BK or by court order get longer terms. As it stands they do not intend to default on any debts or wipe out the stock. Bill Ackman of Pershing Square has a major intrest in the debt and common shares. I own a few thousand shares and hope they emerge BK in a few months as a viable concern.
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Old 04-17-2009, 07:34 PM   #8
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It's encouraging to hear this may be a liquidity problem (rather than punch-drunk managment over building in boom times).
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Old 04-17-2009, 08:04 PM   #9
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"Liquidity issues." Yes, we're hearing a lot about this. Nobody goes broke anymore, they are just having liquidity challenges. I think "Liquidity issues" should join other phrases in the "fashionable but overdone to the point of numbness" pile:

- "I'm leaving this position to spend more time with my family"
- "Hey, I didn't make this problem, it's much worse than anyone thought, it will take awhile to clean up . . ."'
- "We lost confidence in Mr XXXX" (apparently no longer need to give specific reasons for sacking someone)
- "I didn't know I had to pay taxes on (fill in the blank)--these laws are really complicated you know!"
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Old 04-17-2009, 11:29 PM   #10
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Quote:
Originally Posted by crazy connie View Post
The malls continue to operate. This was a liquidity/debt problem as commercial loans are much shorter time frames. These malls have a plus 90% occupancy rate. They can sell off 1 or 2 prperties and emerge from BK or by court order get longer terms. As it stands they do not intend to default on any debts or wipe out the stock. Bill Ackman of Pershing Square has a major intrest in the debt and common shares. I own a few thousand shares and hope they emerge BK in a few months as a viable concern.
Here is a little piece on the (good) expected prospects for GGP common in bankruptcy.


Todd Sullivan's - ValuePlays: Pershing Betting General Growth (GGP) Goes Under $$

ha
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