Nov 11, 2008 5:35 pm US/Central
Water Tower Place In Serious Financial Trouble
Owner General Growth Properties Almost Worth Nothing
CHICAGO (CBS) ―
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The owner of the Water Tower Place and several other local malls is in serious financial trouble.
CBS
There was a dramatic reaction on Wall Street to news we reported last night about a possible bankruptcy for the operator of Water Tower Place and other malls. Shares of General Growth Properties bottomed at 40 cents before rebounding a bit Tuesday. Early this year, shares of the Chicago-based company were trading at nearly $50. CBS 2's Kristyn Hartman reports with a look at what debt and cash flow problems mean for retailers and shoppers.
Shoppers are finding open doors in the midst of a big slide for what has been a solid company for many years. The trouble now is that General Growth Properties or GGP has $4 billion in loans coming due over the next 14 months so it's trying to refinance.
You're likely familiar with some of GGP's holdings. The real estate investment trust owns 220 malls across America and here in Illinois.
The local sites include Lincolnshire Commons, Spring Hill Mall, Northbrook Court, Oakbrook Center and Water Tower Place.
Shoppers at any of those probably wouldn't notice anything's amiss because it's business as usual for GGP's retail tenants.
A spokesperson said the publicly held company is looking into a lot of options right now. It could sell off malls - it's already put three of its Las Vegas strip properties up for sale. It's also looking into joint venture interests and talking to lenders in an effort to fix its credit or cash flow issues.
A whole bunch of factors landed GGP in this spot - everything from the country's credit crisis to the floundering economy to fears that in the long term people just aren't going to spend money, and retail's going to go soft.
A financial analyst spoke about the difficulty of the situation and a couple of "what if" scenarios.
"There's just a lack of people willing to lend in this market, even to companies with trophy properties," said James Shilling, Professor of Finance, DePaul University. "If they can't get a loan and if they can't sell to somebody, then I think the only recourse is bankruptcy, then restructure, then assets sold piecemeal."
GGP wouldn't talk about bankruptcy.
But a spokesperson said "...regardless of our situation, our properties and company will continue to operate, remain vibrant, and look forward to a prosperous holiday season."
General Growth Properties has been around since 1954. It's headquartered here in Chicago and employs about 4,000 people across the country.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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