April 21, 2009

Business News - Mall Giant Declares bankruptcy

Mall Giant Declares Chapter 11, Vendors Ponder Implications. General operates 200 malls in 44 states and is second-largest right behind Simon. Maybe with the advent of social networking over mobile devices like Twitter, the physical hangout of the mall has lost some of it's appeal somehow.

CHICAGO -- News of General Growth Properties Inc.'s bankruptcy filing on April 16 is sending shockwaves through the bulk-vending channel, where malls have increasingly become prime locations over the past decade.

General Growth, which operates some 200 malls in 44 states, is the second-largest U.S. mall owner behind Simon Property Group. It is unlikely to face liquidation, and its malls will continue to operate. The company said it intends to work with its constituencies to emerge from bankruptcy as quickly as possible while executing a reorganization plan that preserves its national business.

The mall owner's decision to reorganize follows a prolonged effort to refinance and extend maturing debt. The company reports that it has already made efforts to extend mortgage maturities, and reduce corporate debt and overall leverage.

"Our core business remains sound and is performing well with stable cashflows," said General Growth chief executive Adam Metz. "While we have worked tirelessly in the past several months to address our maturing debts, the collapse of the credit markets has made it impossible for us to refinance maturing debt outside of Chapter 11."

However, the General Growth bankruptcy is being viewed as a harbinger of sustained weakness in the commercial real estate and retail markets, which may lead to further location closings. Analysts estimate that the commercial real estate industry has about $264 billion in debt scheduled to mature this year, and $273 billion in 2010.

Posted by staff at April 21, 2009 02:11 PM