The Largest U.S. Property Bankruptcy Filed by General Growth Properties
April 16th, 2009 by Joshua Dorkin | 1 Comment | Filed in Commercial Real Estate
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In yet another sign that the economic downturn can gobble up companies small and large alike, Bloomberg is reporting that General Growth Properties, the owner of such prime properties as Faniel Hall and the South Street Seaport, filed the biggest real estate bankruptcy in U.S. history. The company had accumulated “$27 billion in debt during an acquisition spree that turned it into the second-largest shopping mall owner.”
ended a seven-month effort today to refinance its debt. The company listed $29.5 billion in assets and debts of about $27.3 billion in the Chapter 11 filing. General Growth will continue operating its more than 200 properties. “We intend to emerge as a leaner company,” General Growth President Thomas Nolan said in an interview today. “We want to come out as a less leveraged company. Our business model remains strong.”
General Growth collapsed after spending $11.3 billion to buy commercial-property developer Rouse Co. in 2004 only to get caught in the credit crunch and a U.S. recession that has cut spending and property values. Banks have reduced lending amid mortgage-related writedowns. Commercial real estate prices in the U.S. dropped 15 percent last year, according to Moody’s Investors Service. Retail sales in the U.S. fell in March as soaring job losses forced consumers to pull back.
As I’ve been saying for many months, we’ve yet to see the full extent of what the housing crash, and ensuing economic recession, is going to do to the commercial sector; it looks like this is one of many signs. The Drudge Report today highlights another story, Report: Ground Zero Redevelopment May Take Decades, which details the delay in development of the WTC site, also partially due to the economic decline, and discusses fears that southern NYC can’t fill several new massive skyscrapers with tenants.
So . . . to those who say that we’re at bottom, what say you now?
Are we going to see other major developers, REITs, and commercial owners fall victim?

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Tags: business, Commercial Real Estate, faneuil hall, real estate, recession, Shopping mall, South Street Seaport

work. Despite interest rates reduced to near 0% levels, $700 Billion thrown at banks, the $168 Billion stimulus (remember those checks?), various rescue schemes to save major corporations, the economy continues to spiral down, seemingly out of control.
advocates using cash instead of credit or debit cards. Studies have shown that people will spend significantly less when paying with cash as opposed to plastic. He is also a proponent of living a debt-free lifestyle and advises people to eliminate their debt as quickly as possible.
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If you saw the Dec 14, 2008, 60 Minutes broadcast featuring a segment titled, “A Second Mortgage Disaster On The Horizon?” you’d probably be scratching your head asking yourself when this meltdown will end.
The week’s most talked-about story hit the wires Friday.
























Joshua Dorkin
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