General Growth Properties Files for Chapter 11
With $27 billion in debt, General Growth Properties Inc., the United States’ second-biggest mall owner and operator, filed for Chapter 11 bankruptcy protection on April 16.
Chicago-based General Growth owns or manages more than 200 malls across the United States, including more than 23 in California. Its California properties include the Glendale Galleria in Glendale and Stonestown Galleria in San Francisco.
Adam Metz, General Growth’s chief executive, said operations of the company’s retail centers would continue without interruption. Also on April 16, the company had received a commitment for a debtor-in-possession financing of $375 million from Pershing Square Management L.P.
The expected infusion of cash will help General Growth’s business, which, Metz said, is continuing to hum along despite being under duress.
“Our core business remains sound and is performing well, with stable cash flows,” Metz said in a company statement. “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.”
General Growth declared bankruptcy after being unable to reach an agreement with creditors to make a deal to pay off its massive debts, according to a company statement.
General Growth recently had completed some expansion projects or was in the midst of expansion projects such as the Elk Grove Promenade, located near Sacramento, Calif. Completion of General Growth’s pending projects probably will not be endangered, according to George Whalin, a retail consultant and president of Retail Management Consultants in Carlsbad, Calif. However, General Growth will probably have to sell some properties to help it emerge from bankruptcy.
If General Growth does decide to sell any centers, rival mall operators Simon Property Group Inc., based in Indianapolis, and perhaps Australia-headquartered Westfield LLC might be candidates to purchase them. But selling a property might be tough in a poor economy, Whalin said. “The desirability of buying a second- or third-tier mall in California now is questionable,” he said. —Andrew Asch
