Glenbrook Owner Closing in on Bankruptcy
Posted by Jeff Pruitt - 2/24/09 @ 2:51 pm - Filed Under Uncategorized
The owners of Glenbrook Square, General Growth Properties, reported earnings yesterday and the news was not good ( via Calculated Risk):
We are considering all strategic alternatives and are continuing our discussions with our lenders. In addition, we have suspended our cash dividend, halted or slowed nearly all of our development and redevelopment projects, systematically engaged in certain cost reduction or efficiency programs, reduced our workforce by over 20% and sold certain non-mall assets. We currently have approximately $1.179 billion of past due debt and approximately $4.09 billion of debt that could be accelerated. However, our lenders have not yet exercised any of their remedy rights with respect to such debt. In addition, we have an additional $1.44 billion of consolidated mortgage debt and approximately $595 million of unsecured bonds scheduled to mature in the balance of 2009 that remains to be refinanced, repaid or extended. In the event that we are unable to extend or refinance our near and intermediate term loan maturities, we may be required to seek legal protection from our creditors.
Let me help with the translation:
We are completely screwed. But thankfully our creditors would be even more screwed than we are if they had to write down our debt (i.e. all the banks that are already insolvent would be in even worse shape). We are looking for financing from somebody at bargain basement prices (hint, hint Federal Reserve). Please save our ass by using some of the TALF for commercial real estate bailouts. If you don’t we will file for bankruptcy and all our creditors will go down with the ship. But this is not a ransom letter.
Something has to give soon. Either the government will give money to one of the major banks to merge with these guys or they will go bankrupt…
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6 Responses to “Glenbrook Owner Closing in on Bankruptcy”
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Let them go bankrupt, I hate government bailout, they are socializing everything.
Jeff, I can’t fathom where all this sh%t will end, but I kow where it should have ended, and that was at the very first check written to AIG.
This country has always had (and still does have) any amazingly effective bankruptcy system. Any one these insurance companies, banks, or auto manufacturers could have stopped the “bleeding” immediately by filing bankruptcy. Filing effectively stops (albeit temporarily) everything, allowing the company to reorganize, liquidate assets and attract investors to basically “start anew”. These companies are instead, putting themselves and us, the taxpayers, through a longer, protracted, more expensive half-assed version of “nationalization” with the added danger of allowing congress to further frick things up.
The United States Goverment has always owned two (2) companies, both of which have been financial failures since day one, The U.S. Postal Service and AmTrack. Why in the fu&k would we ever want to allow the U.S. Government to “run” ANY business? It boggles my mind how anyone can have faith in the capabilities of the bureaucracy.
Calculated Risk concludes: “No BK yet for the 2nd largest mall owner.”
Unlike the automakers, GGP is not seeking government bailouts.
According to the WAPO, earnings from operations are good despite the financing problems . . .
Tenant occupancy for its 200+ centers is 92.5% and sales income actually went up from last year.
Here is a hot stock tip: GGP stock was 63 cents today and the income generation from its leases and its equity in property make the company worth far more than the present stock value . . . even at a fire sale. Low risk, big reward if stock can get back to just 10% of last year’s stock values, return would be 500%.
By the way, the lender who will not cooperate by renewing GGP mortgages is none other than Goldman Sachs, the recipient of $10 Billion in bailout money and another $5 Billion from Warren Buffett.
The keyword there is “yet”. If they can’t refinance their debt then they are toast…
And keep in mind that behind GM Truck & Bus, Glenbrook has the second largest assessed valuation subject to Allen County property taxes - If they go down what happens to income for our schools and payment of such things as the bonds for Fort Wayne International “Kittyhawk” airplane parking spots, et al?
Actually GM pays 17% of Allen County taxes, Glenbrook not sure anymore, and kittyhawk is bankrupt. So It looks like the International Harvest days of massive unemployment all over again in Fort Wayne.