Early this morning, mall owner and operator General Growth Properties announced that it filed for bankruptcy protection. The company noted that it couldn't "reach an out-of-course consensus" on how to deal with its debt. Roughly 158 regional shopping centers also filed for bankruptcy protection. In February, GGP's past due debt totaled $1.18 billion and another $4.1 billion debt could be accelerated. The company expects to pursue a plan of reorganization that should extend mortgage maturities and cut the firms corporate debt. GGP received a commitment for a debtor-in-possession financing facility of roughly $375 million from Pershing Square Capital Management.
GGP's CEO Adam Metz stated, "Our core business remains sound and is performing well with stable cash flows. We believe that chapter 11 is the best process for restructuring maturing mortgage loans, reducing the company's corporate debt, and establishing a sustainable, long-term capital structure for the company. 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."
GGP operates roughly 200 million square feet of retail space, which includes more than 24,000 retail stores across the company. Technically, GGP was in the $1 region before the announcement, a far cry from the company's all-time high in the $67 region set in March 2007. With the company filing for bankruptcy protection, technical support and resistance doesn't make a great deal of difference.
What does this mean for the company's malls? We will find out during the coming weeks.
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