The top stories on CBS4.com
Nov 11, 2008 11:01 pm US/Eastern
Grim Economy Endangers 5 South Florida Malls
Owner Of Bayside, Other Malls Considers Filing For Bankruptcy
MIAMI (CBS4) ―
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Miami's Bayside, one of the properties owned by General Growth Properties.
CBS
General Growth Properties Inc., owner of 5 major shopping centers in South Florida, saw its shares plummet Tuesday after the mall owner warned it faces solvency trouble and may be forced to file for bankruptcy if it can't refinance or extend nearly $1 billion in debt due next month.
The nation's second-largest mall owner --its big-name holdings include downtown Miami's Bayside and the Village of Merrick Park in Coral Gables -- also disclosed in a regulatory filing late Monday that it may default on certain debt obligations.
Making matters worse is another $3.07 billion in property and corporate debt slated to come due next year.
"Given the continued weakness of the retail and credit markets, there can be no assurance that we can obtain such extensions or refinance our existing debt or obtain the additional capital necessary to satisfy our short-term cash needs on satisfactory terms," the Chicago-based REIT said in filing with the Securities and Exchange Commission. "...Our potential inability to address our 2008 and 2009 debt maturities in a satisfactory fashion raises substantial doubts as to our ability to continue as a going concern."
General Growth, beset by falling funds from operations and plagued by a tightening global credit market that's making it difficult for companies to obtain financing, is trying to sell off properties and cut costs to weather the rocky economic climate.
It's also suspended its dividend and ousted a cadre of top executives. But that hasn't calmed investors, who've sent the company's shares into a virtual free-fall since September.
Spokesman David Keating couldn't immediately comment Tuesday.
The trust owns 13 malls and shopping centers in Florida, and in South Florida owns Pembroke Lake Mall, Mizner Park in Boca Raton, and the still under-construction Kendall Town Center, in addition to Bayside and Merrick Park.
A bankruptcy filing would not necessarily mean the malls would close, experts say, but finding buyers for the properties might be difficult given the current depressed retail market. Many of the malls have seen tenants close stores, cutting revenue at the malls and adding to the trust's financial problems.
General Growth shares fell 88 cents to close at 49 cents per share in trading Tuesday.
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