General Growth considering alternatives to address loan maturities; bankruptcy possible

By Caroline Salls

Pittsburgh, Feb. 24 - General Growth Properties, Inc. said it is considering all strategic alternatives, including bankruptcy, and continuing discussions with lenders to address near-term and intermediate loan maturities, according to a company news release.

According to the release, the refinancing market remains at a standstill, and the company has $1.179 billion of past-due debt and $4.09 billion of debt that could be accelerated.

The company said it also has an additional $1.44 billion of consolidated mortgage debt and roughly $595 million of unsecured bonds scheduled to mature in 2009 that remain to be refinanced, repaid or extended.

In addition to exploring alternatives and lender talks, General Growth said it has suspended its cash dividend, halted or slowed nearly all development and redevelopment projects, systematically engaged in cost reduction or efficiency programs, reduced its workforce by more than 20% and sold some non-mall assets.

If it is unable to extend or refinance its near-term and immediate-term loan maturities, General Growth said it may be required to seek protection from its creditors.

While the total of minimum rents and tenant recoveries remained essentially flat in the fourth quarter of 2008, the company said overall declines in the general economy and the retail market specifically impacted its retail properties, causing revenue reductions in overage rents and other income.

General Growth said cost reductions in marketing, repairs and maintenance, supplies, contracted services, security, landscaping and personnel costs did not fully offset its revenue declines.

As previously reported, the company announced on Jan. 30 that it had entered into amended and restated forbearance and waiver agreements with its syndicates of lenders for its 2006 senior credit agreement and its secured portfolio facility.

The new agreement extends the forbearance periods to March 15. They had been due to expire on Jan. 30.

In return, General Growth agreed to restrictions and covenants. The lenders agreed that some possible future cross-defaults on the company's mortgage debt will not cause an immediate termination of the forbearance agreement.

General Growth is a Chicago-based real estate investment trust that owns regional shopping malls, master planned community developments and commercial office buildings.

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