READ MORE) / " title="PROVIDENCE PLACE is one of more than 200 malls owned or operated by General Growth Properties. But even if the Chicago-based real investment trust fails, the Providence mall should thrive, local analysts told PBN this fall. (READ MORE) /"/>CHICAGO – “We are primarily focused on our near and intermediate term loan maturities,” General Growth Properties Inc. (NYSE: GGP), the shopping-center giant whose properties include Providence Place and the Silver City Galleria, acknowledged last night in its report for the quarter and year ended Dec. 31.
“The refinancing market remains at a standstill,” the company noted. That credit freeze continues to impede General Growth’s search for refinancing for the short-term and mid-term debt left over from its buying spree of the 1990s and early 2000s.
“We are considering all strategic alternatives and are continuing our discussions with our lenders,” the company said. “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 work force by over 20 percent and sold certain non-mall assets.”
Since October, the real estate investment trust (REIT) has also been seeking buyers for certain shopping centers. The list began with the Palazzo and Fashion Show malls – the Las Vegas properties securing $900 million in loans on which General Growth is now in default (READ MORE) – and has grown to include Providence Place, the historic Faneuil Hall Market Place in Boston and other high-end retail and mixed-use facilities across the Northeast.
As of Dec. 31, the company listed total assets of $29.56 billion, up from $28.81 billion a year earlier, with the bulk of those assets ($27.46 billion) tied up in real estate investments. Against those assets, it reported total capitalization including stockholder equity and minority interests of $27.12 billion at year’s end, up from $26.21 billion a year earlier, with mortgages, notes and loans comprising $24.85 billion of that total.
“We currently have approximately $1.179 billion of past-due debt and approximately $4.09 billion of debt that could be accelerated,” as well as about $1.44 billion in consolidated mortgage debt and $595 in unsecured bonds slated to mature later this year, General Growth said.
The company noted that “our lenders have not yet exercised any of their remedy rights” regarding either its past-due debt or its other debt whose terms are violated by the delinquencies. But still, General Growth said, renewing the bankruptcy warning it first issued in November (READ MORE), “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.”
For all of 2008, the company saw its profit fall to $26.26 million – a 90.88 percent decline from the preceding year’s $287.95 million – despite annual revenue that grew 3.06 percent to $3.36 billion. Earnings per diluted share fell to 10 cents last year from $1.18 in 2007.
Interest income shrank to $3.197 million in 2008, a decline of $5.44 million, or 63 percent, from the year-ago $8.64 million. Meanwhile, the company’s interest expense rose to $1.30 billion, an increase of $125.40 million, or 10.68 percent, from the 2007 expense of $1.17 billion.
For the three months ended Dec. 31, General Growth posted a loss of $965,000 – compared with a year-ago gain of $58.73 million – on fourth-quarter revenue that fell 2.99 percent to $900.88 million. Earnings per diluted share fell to about 0 cents from the 2007 fourth quarter’s 24 cents per share.
Fourth-quarter interest income shrank $1.40 million, or 85.28 percent, to $241,000 from the year-ago $1.64 million, while the company’s interest expense grew by $23.62 million, or 7.40 percent, to $342.96 million in the period just ended from the 2007 fourth quarter’s $319.33 million.
The retail and other segment posted operating income of $701.76 million, a 2.38 percent decline from the 2007 fourth quarter’s $718.93 million, on property revenue that dipped 2.77 percent to about $1 billion. “The aggregate of minimum rents and tenant recoveries remained essentially flat for the quarter,” General Growth said. But the deepening recession “impacted our retail properties, causing revenue reductions in overage rents and other income (for items including promotion, sponsorship and parking),” a decline that only partly offset by spending cuts in categories such as marketing, maintenance, supplies, landscaping and personnel.
But the company’s master-planned properties segment saw fourth-quarter operating income rise 19 percent to $715.37 million from the year-ago $601.17 million, as land sales rose 14.05 percent year over year to $53.60 million.
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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.
