by David Bodamer November 19th, 2009
General Growth has reached a deal with its lenders to restructure mortgages on 70 malls. It hopes to reach similar agreements on other properties based on this one. It announced the pact during a bankruptcy court hearing. The Wall Street Journal and Reuters have stories so far.
From the WSJ:
Attorneys for General Growth, which has been operating under Chapter 11 bankruptcy protection since April, outlined rough details of the deal before U.S. Bankruptcy Judge Allan Gropper. But they didn’t touch on details such as the total amount of debt covered by the deal. General Growth intends to use the pact as a template for negotiating deals with the rest of its many creditors, its attorneys said. They requested a confirmation hearing for the initial pact be set for Dec. 14.
The deal would extend the due dates on the mortgages by an average of six years to 2016 in return for General Growth providing those lenders “significant concessions” such as additional amortization payments on the loans, more reserves for the loans and additional bankruptcy protections for the lenders. General Growth’s attorneys didn’t quantify the total cost to the company. The lenders involved are servicers overseeing securitized mortgages and life-insurance companies including Prudential Financial Inc.
There have also been a couple of interesting posts in the blogosphere about General Growth, especially in light of the news that broke earlier this week that Simon may be prepping a bid for some or all of General Growth’s properties.
David Stejkowski reviewed some earlier predictions about what he thought might happen with General Growth’s bankruptcy. He thought Simon would own part of GGP and Westfield might be involved. And that’s exactly what the story earlier this week indicated could happen.
Meanwhile, The CRE Review put up a lengthy post that examined a potential deal. It includes a link to an interactive map charting what a combined Simon and General Growth portfolio would look like. Here’s a screen shot of the map. But you should go to the actual one if you really want to dig deep into the geography. The post also looks at the companies’ debt loads and some of their largest tenants and features some illustrative charts. So there’s a wealth of information there.
Related Topics: Finance, News, REITs, Retail Real Estate |
by David Bodamer November 17th, 2009
This just came over the wires from the Wall Street Journal. It appears Simon Property Group has hired an adviser and is evaluating General Growth Properties. Meanwhile, Westfield Group also has cash it could use as part of an acquisition. Could a bidding war be afoot? Or could the firms be looking to divvy up General Growth’s assets? In the mean time, it appears General Growth is very close to restructuring its debt.
There’s a ton of history here. Years ago Simon and Westfield teamed with Rouse Co. to buy Rodamco North America for $5.3 billion, snatching the company right from under General Growth’s nose. General Growth shortly before that deal had issued 8 million shares as it presumably prepped to take over Rodamco. General Growth eventually used the funds in a series of buys that culminated in its takeover of Rouse–a bit of sweet revenge for the firm. At the end of that spree, General Growth nearly rivaled Simon in size. (Our May 2005 cover story recounted how the firms emerged as the industry’s two titans.)
However, the Rouse deal, along with some of the others GGP had undertaken, left it saddled with a ton of debt, which is what triggered its bankruptcy filing earlier this year. Simon, for its part, also has a history of buying distressed firms. In early 2007 it purchased troubled Mills Corp. It will be interesting to track how all of this shakes out.
Mall giant Simon Property Group Inc. has hired investment adviser Lazard Ltd. and law firm Wachtell, Lipton, Rosen & Katz to help it formulate a strategy for possibly bidding for all or part of rival General Growth Properties Inc., which is operating under Chapter 11 protection.
The moves set the stage for what could be a takeover struggle as General Growth readies a plan to reorganize and exit from bankruptcy. General Growth, the country’s second-largest mall operator, after Simon, by number of properties, is close to a deal with lenders to restructure its $11.5 billion in securitized mortgages with the intent of filing a reorganization plan by February, people familiar with the talks say.
…
Another big rival, Australian mall owner Westfield Group, has $6.8 billion of cash and equivalents, much of it raised in the past year. Westfield, which owns 55 malls in the U.S., is monitoring General Growth’s bankruptcy but hasn’t hired advisers to study it, a person familiar with the matter said. Westfield and General Growth representatives declined to comment on the matter. A Simon representative confirmed that the company has hired the advisers.
Related Topics: Investment, Management & Leasing, News, REITs, Retail Real Estate |
by Elaine Misonzhnik November 13th, 2009
It was a mixed bag today in terms of news for the retail real estat industry. Costco’s announcement of its first store in Manhattan was encouraging. Wal-Mart’s warning that we might be in for a lackluster holiday shopping season was not.
- For some landlords, the break-down in leasing fundamentals is proving to be a blessing in disguise. Bloomberg reports that warehouse club Costco opened its first store in Manhattan , in East Harlem. Costco has been looking for a location in the city for years, but was finally able to close the deal because of a deep discount on the rent.
- Those in the retail real estate industry, however, should brace themselves for the possibility that this downturn might last a while. When reporting its sales results today, Wal-Mart warned its customers still worry about spending money, according to The New York Post. That means the holiday shopping season isn’t likely to be great for the retailers.
- In addition, it seems the string of liquidations in the retail sector is not over yet. This week, ink seller InkStop filed for Chapter 7 bankruptcy, reports Cleveland.com.
- Meanwhile, Forbes published a story criticizing private equity firm Kohlberg Kravis Roberts for getting too greedy on the Dollar General deal. KKR reportedly took millions of dollars in fees from the retailer’s coffers before its IPO.
- The encouraging news is that there is finally some movement on the real estate front. CoStar reports that institutional investors are beginning to buy class-A commercial assets. You can read Retail Chatr’s reaction to some of the points the story makes here .
- At the same time, some banks have begun to dispose of the most toxic real estate loans on their balance sheets, according to Money CNN. In a market where many lenders still prefer to “pretend and extend,” that’s a sign of a breakthrough.
Related Topics: Development, Finance, Investment, Management & Leasing, News, REITs, Research, Retail, Retail Real Estate, Trends |
Black Friday Reaction; Beware Justin Bieber; There’s an App for Malls(Holiday Weekend Roundup)
by David Bodamer November 30th, 2009
We made it through Black Friday and the rest of the weekend. NRF’s early take is that up 0.5 percent. ShopperTrak’s numbers are extrapolated off the traffic counts the company conducts at malls.
Barry Ritholz looks at why the earliest numbers that get reported are a bit suspect. We’ll get more reliable figures tomorrow. That’s when ICSC and Goldman Sachs report the first weekly holiday same-store sales stats. Still, all the early numbers should be viewed with some skepticism and we really need to wait until the full season has passed and we started getting the monthly same-store sales numbers from retailers. We’ll get November numbers in early December. That will be the first really clear view of how the holiday shopping season is panning out.
As the stats come rolling in, the Wall Street Journal has a report that wonders if any of the holiday sales predictions matter. Most of the previews come out in September and October. Is that too soon for forecasts? The report also looks at the methodologies of the different prognosticators and wonder if any are accurate enough.
Here are some other news and notes from the last few days.
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