CHICAGO – Mall owner General Growth Properties (NYSE: GGP) last night announced agreements with its lenders.
The real estate investment trust (REIT) said its administrative agent “has received consents from the requisite lenders … to waive certain identified events of default under the 2006 Senior Credit Agreement,” and to forbear from exercising certain rights and remedies with respect to those events until Dec. 31, subject to certain conditions.
Meanwhile, The Rouse Co. LP (TRCLP) – a General Growth subsidiary that is seeking to negotiate forbearance agreements with the holders of five series of unsecured notes that totaled about $2.25 billion in unpaid principal as of Dec. 31 (READ MORE) – has won an extension until 5 p.m. on March 20 of the tentative consents granted by its lenders during the negotiations.
Rouse, the REIT whose 2004 acquisition brought General Growth a number of properties, including Providence Place and the Faneuil Hall Market Place in Boston, is seeking to extend those forbearance agreements until the end of 2009. Its success in that effort is one of the conditions under the parent company’s agreement with the holders of its 2006 senior credit, General Growth noted.
That effort now appears likely to succeed: The company “has been informed by the representatives of an ad hoc committee of holders of TRCLP notes – the members of which hold in the aggregate approximately 41 percent of TRCLP notes – that all of the members of the ad hoc committee have committed to consent to the forbearance,” General Growth said last night.
“We are pleased that we have been able to obtain consents from the requisite lenders under our 2006 Senior Credit Agreement and with the positive reaction to the TRCLP bond consent solicitation,” said Adam Metz, General Growth’s chief executive officer. “Given this support, we feel it is appropriate to extend the expiration date for the consent solicitation, in order to give bondholders more time to receive and review the consent solicitation materials and to consider this request.”
Like many other retail REITs, General Growth has been struggling amid the global credit freeze and the downturn in consumer spending. “Thousands of shopping centers will close” in 2009, Howard Davidowitz, chairman of New York-based retail consulting and investment banking firm Davidowitz & Associates Inc., told Bloomberg News. “It’s a debacle.”
But unlike some mall owners, General Growth is not basically unsound, hedge-fund manager William Ackman told Bloomberg yesterday in announcing that he may join the company’s board.
“This is a solvent company with a liquidity problem,” he said. But he predicted the mall owner will seek bankruptcy protection “imminently.”
Ackman – whose Pershing Square Capital Management LP last year acquired stakes that he says could give it ownership of 25 percent of the REIT – advocates a reorganization of General Growth rather than a liquidation. The latter, he told Bloomberg, would be “a disaster for the entire REIT industry.”
General Growth Properties Inc. (NYSE: GGP) – owner of Providence Place and the Silver City Galleria in Taunton and manager of the Swansea Mall – is a publicly traded real estate investment trust (REIT). GGP’s portfolio includes about 200 million square feet of retail space and more than 24,000 stores, as well as stakes in various master-planned community developments and commercial office buildings. Additional information is available at www.ggp.com.
