Mall titan General Growth Properties Inc. (GGP), sought bankruptcy protection early Thursday after failing to refinance more than $27 billion of debt. It is in one of the largest real-estate failures in U.S. history. In addition, approximately 158 regional shopping centers owned by GGP and certain other GGP subsidiaries have also filed for protection.
The decision to pursue reorganization under chapter 11 came after extensive efforts to refinance or extend maturing debt outside of chapter 11. Over many months, the company has endeavored to negotiate with its unsecured and secured creditors to obtain the time needed to develop a long-term solution to the credit crisis facing the company. Unable to reach an out-of-court consensus, GGP reluctantly concluded that restructuring under the protection of the bankruptcy court was necessary.
“Our core business remains sound and is performing well with stable cash flows. We believe that chapter 11 is the best process for restructuring maturing mortgage loans, reducing the Company’s corporate debt, and establishing a sustainable, long-term capital structure for the Company,” said Adam Metz, Chief Executive Officer of the Company. “While we have worked tirelessly in the past several months to address our maturing debts, the collapse of the credit markets has made it impossible for us to refinance maturing debt outside of chapter 11,” he said. [via BW]
The Chicago-based General Growth, which owns and manages more than 200 malls, is the second-largest U.S. mall owner by number of properties behind Simon Property Group Inc.
The company’s stock closed Wednesday at $1.05, on the NYSE. GGP lost more than 80% of its market value in six months after saying repeatedly it may have to file for bankruptcy.