Venture

Robert Trigaux

Major U.S. mall owner opts for bankruptcy

16

April

Update: 11 am Tampa Bay time: To clarify and confirm the earlier posting below, University Mall in Tampa is not part of today's General Growth Properties bankruptcy proceeding. The company manages the mall, including leasing and operations, but the company is not the majority owner.

Wake up and good morning. Well, we've been hearing that the woes of the residential housing market would spread to the commercial real estate market. Here's proof: Chicago-based General Growth Properties, one of the largest mall operators in the nation -- that includes 16 malls in Florida alone -- filed for bankruptcy early this morning. It's one of the biggest commercial real estate collapses in United States history.Universitymalltampa

One Tampa mall may not -- we'll clarify this later today -- fall under the company's general bankruptcy move. General Growth owns northeast  Tampa's University Mall on Fowler Avenue. But it is operated through a third party, and General Growth says "some" of its third party businesses are not part of its bankruptcy proceeding.

The mall, which has had its shares of woes but is attempting a comeback, ranks among the largest shopping centers in the Tampa Bay area. It's anchored, according to University Mall's own Web site, by Macy’s, Sears, Dillard’s, and Burlington Coat Factory. The mall features over 100 stores and restaurants including Aeropostale, Forever 21, Victoria’s Secret, American Eagle Outfitters, Old Navy, Finish Line, and Camille La Vie.

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 New York Times reports. The company was hurt 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. Said Adam Metz, company CEO:

“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.”

Among the companies listed as General Growth’s 100 largest unsecured creditors are EuroHypo, a unit of Germany’s 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. The bankruptcy filing by General Growth includes most of the company’s malls, which will continue to operate.

Many analysts suspect that, rather than liquidating, General Growth will restructure in bankruptcy court and emerge as a smaller company after shedding several malls to satisfy creditors, the Wall Street Journal reports. If not, the newspaper says a fire-sale liquidation of General Growth's malls would flood the already weak market for mall sales and hammer the value of those and other malls. Here's a link to General Growth's bankruptcy filing.

According to the Wall Street Journal (subscription required), the company was led by Matthew Bucksbaum and his late brother, Martin, who named their company General Growth -- rather than using the family name -- so that investors would find it in the stock tables between bigger names like General Electric and General Motors. The times really are changing.

-- Robert Trigaux, Times Business Columnist

[Last modified: Tuesday, June 1, 2010 12:24pm]

    

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