General Growth Properties (GGP), the Chicago-based company that's the nation's second-largest owner of shopping malls, is almost literally worth nothing. It's debt totals $24 billion, much of it loaded onto the balance sheet with its 2004 purchase of a major competitor, Rouse. And $24 billion is almost exactly what the company says its malls are worth, an implausible figure given that anything the company sells now carries the scent of desperation.
But it must sell assets or take on partners, diluting shareholder stakes, if it is to survive. Its recent history of how the founding Bucksbaum family let the company spin wildly out of control is a cautionary tale of how debt can consume a company. General Growth was more than its name. It describes its damnation.
Chairman John Bucksbaum and his former chief financial officer, Bernard Freibaum, thought the debt markets would stay forever friendly and they could refinance and change terms at will. Bucksbaum never imagined that there could be a freezing of the credit markets, or that the situation would get so bad as to imperil consumer spending, the source of GGP wealth.
(Hat tip Dirt Lawyer's Blog.)
Here are some links to older stories for reference:
- October 17, Management Changes at GGP
- October 15, Margin Calls Hit Two More Retail REITs
- October 7, General Growth Near Bankruptcy?
- October 3, General Growth CFO Steps Down; Company Suspends Dividend
- October 2, GGP Under Fire for Inclusion on Short-Sell Ban List
- October 1, Could General Growth Be Sold?
- September 23, Short Selling Banned on General Growth
- September 22, General Growth Strikes Back
- September 16, General Growth Offers More Recourse
- August 12, Another Look at GGP's Debt
- August 6, Analysis of GGP's Debt
- July 25, Stories With Bigger Implications?
- July 14, GGP Lines Up New Financing
- April 16, GGP's Growing Debt Problem