As I'm writing this, General Growth's stock is at $4.03 per share--down nearly 50 percent on the day.
The new round of selling comes as analysts raise the possibility of bankruptcy for the REIT.
Shares of General Growth Properties Inc. were down more than 45% in midday trade Tuesday on growing fears the real estate investment trust may not be able to refinance its debt, which could force it to seek a buyer or declare bankruptcy. "The REIT's stress is mostly due to over-leveraging acquisitions in the past five years," Stifel Nicolaus analysts wrote in a note. Last week, Moody's Investors Service cut General Growth's debt ratings, citing strained financial flexibility and expected profit pressure due to an economic slowdown. The company recently replaced its chief financial officer and suspended its dividend. General Growth shares were the biggest percentage decliner among stocks listed on the New York Stock Exchange at last check Tuesday.
I'm stunned at how quickly this now seems to be snowballing. There have been concerns about the company's debt load for a while. It's been more than a year. People have wondered about it ever since the credit crisis really took hold last September. I think the red flags really came out after Centro began to have its problems. Everyone looked around and realized that General Growth was the company with the most debt.
But things have really begun to spiral out of control in just the last 30 days. Could the company really be on its last legs this fast? It's hard to fathom. There's an even more harrowing question now to ask: If General Growth can fall, could we see other retail real estate companies on the brink?
Here are some links to older stories for reference:
- 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