Augusta Mall parent company files for Chapter 11 bankruptcy

Thursday, April 16, 2009 9:10 AM
Last updated 11:45 AM
  • Follow Latest News

LOS ANGELES — The nation's second-largest shopping mall owner, General Growth Properties, filed for Chapter 11 bankruptcy protection Thursday in a tough bargaining move to restructure it's $27 billion in debt.

General Growth, which owns more than 200 malls including Faneuil Hall in Boston and the South Street Seaport in Manhattan, said shoppers at its malls will not be affected by its bankruptcy filing.

The company operates four malls in the Atlanta area - Cumberland, North Point, Perimeter and Southlake.

The Chicago-based company is paying the price for its aggressive expansion at the height of the real estate boom. General Growth, like many homeowners during the frenzy, bought several properties at top dollar and now is finding lenders unwilling to refinance.

The real estate crisis has been slow to affect the market for retail, hotels and office buildings. But the delinquency rate for commercial loans, while still relatively low, is creeping up and could deepen the economic recession.

"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," Chief Executive Adam Metz said in a statement.

The news sent the real estate investment trust's stock down 16 cents, or 15 percent, to 89 cents in midmorning trading. The stock traded last spring as high as $44.23.

The move by the General Growth had been widely anticipated since the fall, when the company warned it might have to seek bankruptcy protection if it didn't get lenders to rework its debt terms. Efforts to negotiate with its creditors ultimately fell short late last month.

Chapter 11 protection typically allows a company to hold off creditors and operate as normal while it develops a financial reorganization plan.

The company had about $29.6 billion in assets at the end of the year, according to documents filed with the U.S. Bankruptcy Court in the Southern District of New York.

The company noted that some subsidiaries, including its third party management business and joint ventures, were not part of the bankruptcy petition.

General Growth said it intends to reorganize with the aim of cutting its corporate debt and extending the terms of its mortgage maturities. The company has a financing commitment from Pershing Square Capital Management of about $375 million to use to operate during the bankruptcy process.

Last month, General Growth said it got lenders to waive default on a $2.58 billion credit agreement until the end of the year.

But its Rouse Co. subsidiary failed to convince enough holders of unsecured notes worth $2.25 billion as of Dec. 31 to accept a proposal that would let the unit avoid penalties for being behind on its debt payments and give it some time to refinance its debt load.

In February, the company reported lower-than-expected fourth-quarter funds from operations and a dip in revenue amid weaker retail rents.

The company has suspended its dividend, halted or slowed nearly all development projects and cut its work force by more than 20 percent. It also has sold some of its non-mall assets.

Comments (12) Add comment
ADVISORY: Users are solely responsible for opinions they post here and for following agreed-upon rules of civility. Posts and comments do not reflect the views of this site. Posts and comments are automatically checked for inappropriate language, but readers might find some comments offensive or inaccurate. If you believe a comment violates our rules, click the "Flag as offensive" link below the comment.
HYPOCRITES 08
7
Points
HYPOCRITES 08 04/16/09 - 08:14 am
0
0
Anyone that watches the stock

Anyone that watches the stock market knew this was coming.

LadyCisback
4
Points
LadyCisback 04/16/09 - 08:50 am
0
0
exactly what does that mean

exactly what does that mean for the mall here in Augusta, GA?

dhd1108
1
Points
dhd1108 04/16/09 - 09:08 am
0
0
lady - nothing., the augusta

lady - nothing., the augusta mall will continue to operate as normal. at least until/if its sold to a new owner at least. then depending on how well its doing the new owner may raise or lower rents/fees which will either attract new stores or slowly make it a ghost mall. Either way you'll probably be shopping there for 2009 Christmas at least :)

dhd1108
1
Points
dhd1108 04/16/09 - 09:10 am
0
0
huh. i should've had my

huh. i should've had my secretary proof-read that last post.

dashiel
176
Points
dashiel 04/16/09 - 10:02 am
0
0
Please have your secretary

Please have your secretary buzz my secretary dhd, pdq, [filtered word], PhD, oic...

Little Lamb
47862
Points
Little Lamb 04/16/09 - 11:09 am
0
0
Oh, my. Now Fred (What, me

Oh, my. Now Fred (What, me worry?) Russell will want the local taxpayers to bail out Augusta Mall by purchasing it for a housing project. But he'll have us build a lake next to it so it will be a lakefront housing project.

dhd1108
1
Points
dhd1108 04/16/09 - 11:11 am
0
0
yeah I honestly don't know

yeah I honestly don't know why they even thought about wasting money on a manmade lake there. You can pretty up the bad side of town.. but like all that lovely landscaping near olmstead housing project.. its "lipstick on a pig"

RU4Real
0
Points
RU4Real 04/16/09 - 12:53 pm
0
0
I think somebody put the

I think somebody put the lipstick on the wrong end of the pig.

142
Points
Dan White 04/16/09 - 02:45 pm
0
0
Malls are dinosaurs and the

Malls are dinosaurs and the thugs have taken over and ruined Augusta Mall like they did Regency. More Richmond County property off the tax roll.

karmakills123
8
Points
karmakills123 04/16/09 - 05:41 pm
0
0
Oh my...what will the thugs

Oh my...what will the thugs do now?.......

recoveringliberal
0
Points
recoveringliberal 04/16/09 - 09:25 pm
0
0
General Growth’s filing is

General Growth’s filing is the beginning of the distress cycle and may lead other companies to fail. This bankruptcy will drive down the values of mall assets in the United States. It’s going to put, I believe, more supply on the market than can be absorbed by investors. This company has long been the poster child of too much debt. But then the USA has been living beyond its means for too long. Witness the growth in personal debt the past decade and the growth of GOVERNMENT DEBT !! How long will this be sustainable ?

themaninthemirror
0
Points
themaninthemirror 04/17/09 - 08:38 am
0
0
What I do not understand

What I do not understand about the Chapter 11 bankruptcy process is that companies are able to obtain a line of credit to use during the bankruptcy process. If they are not able to make their loan obligaions on existing debt, how will they be able to repay 375 million? I think we would all file for Chapter 13 on personal debt if we could obtain a generous line of credit to see us through the process. Why doesn't GGP just sell all the malls, use the money to pay off all or as much of the existing debts possible, and live happily ever after.

Back to Top

Top headlines

Turkeys taste own medicine

I got up and out of my sickbed so I could write this column because it’s time for the annual Turkey of the Year awards, the highlight of the holiday season.
Search Augusta jobs