Mall Owner Warn Against Debt, Yet Post Gains

Although General Growth Properties indicated they may be forced to seek bankruptcy protection if it cannot rework the terms of billions of dollars in loans coming up this year, it did report that its fourth quarter funds from operations rose on a series of one-time gains.
The Chicago based company said that operational funds rose 17% from $190.4 million to $222.2 million in the fourth quarter a year earlier thanks to favourable performances from key real estate investment funds.

General Growth reported that it was going to keep ongoing discussions with their lenders open and consider all strategic alternatives. General Growth is on of the biggest mall owners in the country owning and managing more than 200 regional shoppings malls in 44 states. Some of the malls it owns are Fashion Show in Las Vegas, Water Tower Place in Chicago, Faneuil Hall in Boston and Ala Moana Center in Honoloulu, plus Landmark Mall in Alexandria, Tyson Galleria in McLean and Laurel Commons in Laurel – all of which are well renowned malls.

The 50-year old company was started by the Bucksbaum brothers who were in the grocery store business. During the real estate market’s boom years, General Growth used debt to aggressively buy up properties with it’s biggest acquisition occurring in 2004 when it paid nearly $13 billion for the Rouse Co. Now, the company has about $27 billion in debt and has currently been struggling over the last few months to get loan extensions.