General Growth Properties Inc., the second-largest U.S. shopping-mall owner, filed for bankruptcy after failing to refinance more than $27 billion of debt, most of it racked up through acquisitions. General Growth, which owns more than 200 shopping malls in the U.S., sought Chapter 11 protection in U.S. Bankruptcy Court in New York. The company listed $29.5 billion in total assets and debts of about $27.3 billion, making it the largest real estate bankruptcy in U.S. history. âWhile 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,â Chief Executive Officer Adam Metz said in a statement. The filing lists Eurohypo AG, a unit of Commerzbank AG, as General Growthâs largest unsecured creditor with claims totaling $2.6 billion under two loans. Noteholders are owed about $4 billion in total. Much of the companyâs debt can be traced to its $11.3 billion purchase of commercial property developer Rouse Co. in 2004. The Chicago-based company lost 81 percent of its market value in six months after saying repeatedly it may have to file for bankruptcy. General Growth closed at $1.05 in New York Stock Exchange composite trading yesterday, valuing the company at $329 million. The shares traded as high as $67 in March 2007. http://www.bloomberg.com/apps/news?pid=20601087&sid=aYYnO.QAJPyc&refer=home
Mall Operator Files for Bankruptcy By MICHAEL J. DE LA MERCED 23 minutes ago The bankruptcy of General Growth Properties marks one of the biggest commercial real estate collapses in U.S. history. http://dealbook.blogs.nytimes.com/2009/04/16/general-growth-properties-files-for-bankruptcy/?hp General Growth Properties Files for Bankruptcy April 16, 2009, 2:34 am Update | 6:50 a.m. General Growth Properties, one of the largest mall operators in the nation, filed for bankruptcy early Thursday morning in one of the biggest commercial real estate collapses in United States history. Despite bargaining for months with its creditors, General Growth faced increasing pressure to handle its more than $25 billion in debt, largely in the form of short-term mortgages that will come due by next year. The company has been severely wounded by the recession, which has wreaked havoc upon the retailers who inhabit its more than 200 malls in 44 states. Many stores have shuttered, depriving mall operators like General Growth of revenue. The filing by the Chicago-based company, made in federal bankruptcy court in Manhattan, included most of the companyâs malls, which will continue to operate. General Growthâs reorganization efforts will likely focus on selling off properties. It has already suspended its stock dividend, cut its workforce by 20 percent and stopped virtually all new development. (Read the filing after the jump.) âOur operational model is sound,â Thomas H. Nolan Jr., the companyâs president and chief operating officer, said on a conference call early Thursday morning, citing âthe unprecedented disruption in the real estate financing markets and the need to extend maturing debtâ as the reason the company filed. âWe made extensive efforts to modify existing maturing debt outstide of bankruptcy,â he added. What began as a crisis in residential real estate has since seeped into the commercial real estate market, as landlords of retail and office space face rising numbers of vacancies. Analysts expect many of these companies to struggle as the recession forces steep cuts in consumer spending and employment rolls. As the second-biggest operator of malls in the nation, behind only the Simon Property Group, General Growthâs troubles have been closely watched by the real estate and retail industry for months. Founded in 1954 and grown through a series of acquisitions â topped by a $12.6 billion deal for the Rouse Company in 2004 â the companyâs huge retail presence has served as a barometer for the ails bedeviling the American retail market. As more stores have closed, mall vacancies are at their highest point in almost a decade, according to Reis, a research company, which said the vacancy rate at the end of 2008 was 7.1 percent, compared with 5.8 percent at the end of 2007. That has left many of the roughly 1,500 malls in the United States groping for a solution â any solution â to their woes. Some have converted retail space into office space. Still others have drastically lowered rents for prized tenants, willing to cut deals to simply keep earning revenue. Some have simply gone dark. Shares in General Growth, which closed on Wednesday at $1.05, have fallen 97 percent over the past 12 months. General Growthâs filing also marks a humbling of the Bucksbaum family, which grew the company from a family grocery business in Marshalltown, Iowa into a powerhouse of retail shopping in the Midwest. It still holds about a 25 percent stake in the company, and John Bucksbaum, an avid cyclist, remains its chairman after having served as its chief executive. Few analysts dispute the quality of General Growthâs malls, which include the Ala Moana Center in Honolulu, Water Tower Place in Chicago and the Grand Canal Shoppes at the Venetian in Las Vegas. But its undoing was the mounting pile of short-term mortgages the operator used to expand. That financing strategy was devised by its longtime chief financial officer, Bernard Freibaum, who was dismissed last October. Since then, the mall owner has pleaded with holders of $2.25 billion in bonds to hold off on demanding payment as it sought to reorganize its debt outside of a bankruptcy filing. But bondholders grew increasingly impatient as bond maturities continued to mount and denied General Growth an abstention from payments for the rest of the year. The company said in its statement that it has secured a commitment for $375 million in bankruptcy financing from Pershing Square Capital Management, the hedge fund that owns more than 25 percent of the company through its holdings of shares and swap contracts. That financing must be approved by a bankruptcy court judge. William A. Ackman, the head of Pershing Square, told Bloomberg Television last month that he foresaw an âimminentâ bankruptcy filing by the company. Among the companies listed as General Growthâs 100 largest unsecured creditors are Eurohypo, a unit of Germanyâs Commerzbank that holds $2.6 billion worth of loans; Wilmington Trust and the Bank of New York Mellon representing several classes of bonds; casinos including Mandalay Bay and the Venetian; and an assortment of retailers like Sephora, Guess?, Borders and Macys. In its bankruptcy filing, General Growth said that it sought permission to retain a bevy of advisers, including the investment bank Miller Buckfire, the turnaround consulting firm AlixPartners and the law firms Weil, Gotshal & Manges and Kirkland & Ellis. The document was signed by Marcia L. Goldstein, the chair of Weilâs well-known bankruptcy practice. âMichael J. de la Merced General Growth Propertiesâ Bankruptcy Filing <a title="View General Growth Properties' Bankruptcy Filing on Scribd" href="http://www.scribd.com/doc/14277534/General-Growth-Properties-Bankruptcy-Filing" style="margin: 12px auto 6px auto; font-family: Helvetica,Arial,Sans-serif; font-style: normal; font-variant: normal; font-weight: normal; font-size: 14px; line-height: normal; font-size-adjust: none; font-stretch: normal; -x-system-font: none; display: block; text-decoration: underline;">General Growth Properties' Bankruptcy Filing</a> <object codebase="http://download.macromedia.com/pub/shockwave/cabs/flash/swflash.cab#version=9,0,0,0" id="doc_753622735111507" name="doc_753622735111507" classid="clsid:d27cdb6e-ae6d-11cf-96b8-444553540000" align="middle" height="500" width="100%" > <param name="movie" value="http://d.scribd.com/ScribdViewer.swf?document_id=14277534&access_key=key-1rqgio167borr25g1msi&page=1&version=1&viewMode="> <param name="quality" value="high"> <param name="play" value="true"> <param name="loop" value="true"> <param name="scale" value="showall"> <param name="wmode" value="opaque"> <param name="devicefont" value="false"> <param name="bgcolor" value="#ffffff"> <param name="menu" value="true"> <param name="allowFullScreen" value="true"> <param name="allowScriptAccess" value="always"> <param name="salign" value=""> <embed src="http://d.scribd.com/ScribdViewer.swf?document_id=14277534&access_key=key-1rqgio167borr25g1msi&page=1&version=1&viewMode=" quality="high" pluginspage="http://www.macromedia.com/go/getflashplayer" play="true" loop="true" scale="showall" wmode="opaque" devicefont="false" bgcolor="#ffffff" name="doc_753622735111507_object" menu="true" allowfullscreen="true" allowscriptaccess="always" salign="" type="application/x-shockwave-flash" align="middle" height="500" width="100%"></embed> </object> <div style="margin: 6px auto 3px auto; font-family: Helvetica,Arial,Sans-serif; font-style: normal; font-variant: normal; font-weight: normal; font-size: 12px; line-height: normal; font-size-adjust: none; font-stretch: normal; -x-system-font: none; display: block;"> <a href="http://www.scribd.com/upload" style="text-decoration: underline;">Publish at Scribd</a> or <a href="http://www.scribd.com/browse" style="text-decoration: underline;">explore</a> others: <a href="http://www.scribd.com/browse/Business-Law/Finance" style="text-decoration: underline;">Finance</a> <a href="http://www.scribd.com/browse/Business-Law/" style="text-decoration: underline;">Business & Law</a> <a href="http://www.scribd.com/tag/general%20growth%20properties" style="text-decoration: underline;">general growth prope</a> </div>