General Growth on the Chopping Block?

There has been significant amount of talk this past week that General Growth Properties (GGP), the giant shopping mall REIT, could be on the chopping block. GGP’s local San Francisco Bay Area assets include the Stonestown Galleria in San Francisco, NewPark Mall in Newark, and Eastridge Mall in San Jose.

The REIT also owns a series of what can be considered trophy malls, including Ala Moana in Honolulu, Hawaii, Pioneer Place in Portland, OR, and Water Tower Place in Chicago, IL. Ala Moana Center alone is probably worth north of $1B dollars. It is one of the premiere shopping centers in the United States.

The mall owner has approximately $1.7B worth of loans coming due in the coming six months as part of its total debt of over $27B. It is seeking ways to raise capital and yesterday announced a suspension of its dividend.

I suspect that unless the company is able to secure additional financing to pay its debts on time, the company likely will be forced into a situation where it takes on foreign JV partners on many of its properties as a first step. If that fails, it might have to enter into outright sales of its properties at significant discounts.

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