Bankruptcy Risks--DDR, Forest City and ... GGP?

And odd post popped up at Business Insider this morning looking at 15 big companies "in danger" of sliding into bankruptcy. I put that in quotes because the percentages listed of these companies going into bankruptcy are quite low.

At any rate, three of the 15 companies are in the retail real estate industry. They include Developers Diversified, Forest City and, get this, General Growth Properties. According to the analysis here General Growth will emerge from bankruptcy later this summer but then be an immediate risk to file again. That seems a bit crazy to me. I know there is a history of some companies slipping into bankruptcy numerous times. But the idea of that happening to General Growth seems a bit odd to me. One of the advantages that General Growth has is that it controls real hard assets. There's more real value there, even when you account for the big slippage in property values since 2007. The company is still pinned by real, cash-flowing assets. Its debt was a problem, but the debt has a real base.

For Forest City and DDR, the percentages are listed as 2.0 percent and 3.1 percent. Those seem like pretty tiny chances. So the headline claiming the companies are "in danger" of falling into bankruptcy is wildly overblown, even if you accept the analysis. If anything, the companies seem to be on much surer footing today than they did in late 2008 or early 2009. I don't see how they can be reasonably classified as bankruptcy risks.

The public real estate firms have gone to great lengths to mend balance sheets. DDR, in fact, is now entirely focused on operations and is currently assessing redevelopment opportunities in its portfolio. In other words, it's focused on improving its cash flow and net operating income. It's not dealing with balance sheet issues any longer.

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