Mall operator files for bankruptcy protection
By ALEX VEIGA AP Real Estate Writer
Updated: 04/16/2009 05:02:01 PM CDT
In its drive to become the second-largest owner of shopping malls in the nation, General Growth Properties Inc. racked up $27 billion in debt. At around 2 a.m. in Chicago on Thursday morning, the retail giant buckled under the weight.
After months of tense negotiations with tightfisted lenders, General Growth filed for Chapter 11 bankruptcy in a bid to protect its 200-plus shopping malls including the Glendale Galleria in Southern California and the South Street Seaport in Manhattan.
The company's properties include Mayfair Mall in Wauwatosa, the Fox River Mall in Appleton and Oakwood Mall in Eau Claire.
The Chicago-based company is paying the price for its aggressive expansion at the height of the real estate boom, when cheap lending proved an irresistible option for bankrolling prime acquisitions, such as its 2004 purchase of the Rouse Co.
The deal gave General Growth retail gems such as Faneuil Hall in Boston, the Providence Place mall in Rhode Island and the Harborplace waterfront marketplace in Baltimore, but at a hefty price: $7.2 billion plus $5.4 billion in assumed debt.
Rolling over financing for commercial properties is common in the industry, but when lenders all but stopped making loans last fall, it left General Growth without recourse to make its debt payments.
"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," Chief Executive Adam Metz said in a statement.
By placing its fate in the hands of a bankruptcy judge, General Growth hopes to cast off its debt and emerge with its portfolio of landmark retail centers intact, although there are no guarantees the company will be able to do so.
"We will not have to sell substantial amounts of our iconic assets," Tom Nolan, president and chief operating officer, said during a conference call with reporters. "We believe we can maintain those."
But should General Growth have to sell-off even 10 percent of its shopping centers, that could depress overall mall property prices, said Chris Stanley, a research associate covering commercial real estate for Reis Inc.
"Mall owners are scared and don't really want this to happen, so I think (General Growth) will try to avoid that route as much as possible," he said.
Nolan acknowledged that the company took on significant amounts of debt to finance its expansion efforts, but stressed that the company didn't run into trouble trying to refinance until last fall.
It is a substantially longer article, so have a look.
Ramsey recently approved some kind of exploratory trip of city officials to try to round up restaurants for RTC. That's really a swim against a strong river current.
It seems an unlikely time for any success. The tiny commercial node Shingobee built, (anchored by the Coborn store), seems vulnerable, with the steady vacancy situation.
It is one property in a smaller set of more local ownership holdings (in comparison to the highly leveraged situation PiPress reported). On the web it's called "Northstar Marketplace," with the Ramsey site being one of several owned by Solomon Real Estate.
There's United Properties, as one of the bigger Twin Cities real estate holdings operations. How sound, right now, are United Properties and Solomon? Any reader with current links on Solomon, in particular, is asked to email or post a comment.
What's next? How big? Will it make the housing collapse look simple and minor by comparison? Will it be only a hiccup, troubling, non-fatal?
______UPDATE______
For those liking nostalgia, RTC groundbreaking was Number 6, in the ABC-Anoka County Union's top ten stories in 2003, here.
Actually, I am unclear, whether Solomon Real Estate Group is in ownership, or is a main agent for the owning interest, at the RTC retail node. This Google and this link might help any reader wanting to see more.