The GGP Index
May 1, 2009 12:00 PM
For the past year, the retail real estate industry has been waiting with bated breath for some kind of resolution on the fate of General Growth Properties, the giant mall REIT that took on too much debt at precisely the wrong time. Now that the firm has finally entered bankruptcy proceedings, we've assembled some key facts and quotes from industry insiders to give you a sense of how the GGP saga is likely to unfold.
Number of years in operation: 55
Number of years as a REIT: 16
I think the bankruptcy means very little in terms of market conditions because it is a unique situation relative to their capital structure.
Stephen Sterrett, Simon Property GroupThis will clearly bring home the fact that if you have large loans coming due, your ability to refinance is practically nonexistent.
Steve Ifshin, DLC Management Corp.U.S. GLA owned: 182 million square feet
If GGP was forced to liquidate, that would end up being a huge weight on commercial real estate values.
Joel Bloomer, MorningstarNumber of properties owned: 200 plus
Number of properties in bankruptcy: 166
Retail portfolio occupancy at year-end 2008: 92.5 percent
Net operating income at year-end 2008: $2.6 billion
Lenders might be more lenient with them because they believe in the quality of the real estate they own.
Bernard Haddigan, Marcus & Millichap Real Estate Investment ServicesIt could certainly be a catalyst for a bit of consolidation in the REIT space.
Jason Lail, SNL Financial LCTotal assets: $29.6 billion
Total debt: $27.3 billion
Who would finance a [GGP acquisition]? The buy of a huge portfolio is partly how GGP got into this trouble in the first place.
Jon Southard, Torto Wheaton ResearchI do not believe that GGP will be liquidated there's no benefit to anybody.
Sam Zell, Equity Group Investments, LLCClosing stock price on the last day of trading: $1.05 per share
Number of employees as of February 2009: 3,500
In order to reorganize, it's very likely they'll have to engage in the disposition of some of their assets.
Sam Chandan, Real Estate Economics LLCI think just given the number of different creditors GGP has, it's very difficult to organize a solution that would allow GGP to continue to exist in its current form.
Suzanne Mulvee, Property & Portfolio ResearchCMBS exposure: 98 loans totaling more than $195 billion
It behooves them to try to restructure quickly and reorganize as fast as they can. I don't know how they are going to do that because credit markets are virtually nonexistent.
Ross Glickman, Urban Retail Properties
Sources: General Growth Properties press releases; Securities & Exchange Commission filings; Morningstar; Realpoint LLC; SNL Financial LC
