Mall operator General Growth Properties, Inc. (NYSE: GGP) has seen its share price plunge more than 98% during the past year, with the equity recently plummeting into penny-stock territory amid concerns about a possible bankruptcy filing. Maybe I'm just an impatient member of the MTV generation, but it struck me today that these Chapter 11 rumors have been swirling around Wall Street for what seems like ages. Can we get some closure on this soap opera, GGP?
Well, according to a report today in the Wall Street Journal, GGP's deadline to renegotiate a $900 million loan on two luxury malls in Las Vegas came and went Thursday with no resolution. The mall mogul is still in talks with its lenders to negotiate a new deal -- but it's now haggling outside the confines of its forbearance agreement, which means those lenders, led by Deutsche Bank (NYSE: DB), can demand payment at any time.
If any one of the seven lenders involved decide to foreclose on the malls pledged as collateral, it could spark a domino effect as the other lenders also jump ship. Such an event would likely prompt GGP to file Chapter 11, say the Journal's Kris Hudson.
Unfortunately, the $900 million loan isn't the only albatross around GGP's neck. The company is also on the hook for a $95 million loan connected to the Oakwood Center Mall in New Orleans, which expired Monday; a $225 million loan from Goldman Sachs Group (NYSE: GS), which expired Feb. 2; and a $58 million securitized mortgage on the Chico Mall in California, which epxired Wednesday.
Whatever the outcome, the Journal's source suggests that impasse on the $900 million loan could be resolved today. The news apparently has investors bracing for the worst, as GGP shares are sharply lower today -- off 7.9% to 57 cents per share, at last check.
Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.
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Reader Comments (Page 1 of 1)
2-28-2009 @ 3:20PM
frustrated tenants said...
The ggp is going down south due to its mall staff. The providence mall and The SILVER CITY GALLERIA MALL are the only malls in mass(Boston) which are filing bankruptcy due to its mall staff. they just care about receiving their pay checks but not bothered about the mall THE SILVER CITY GALLERIA MALL is falling apart. the floor are breaking with cracks and people usually trip but the ggp are lucky enough no one has sued them yet. the roof is leaking but it has been two years since the new staff and manger DAVID DEPALMA has arrived in the mall and made the mall into a graveyard. it just because of him more than 20 stores in the mall are gone, because he raised the rent on them and was not flexible with them..stores like Ruby tuesday..etcc..
Every single person in the mall literally wants the staff to be changed but we are ignored by the ggp company..
THEY NEED TO REALIZE WE DON'T NEED THEM THEY NEED US.. FOR THEM TO STAY IN THE MARKET..
THIS BEHAIVIOUR WILL LEAD THEM TO BANKRUPCY AND IT HAS..