General Growth Properties Inc., the second-largest U.S. mall operator, has filed for Chapter 11 bankruptcy protection. The announcement comes after the company says it failed to persuade its lenders to refinance billions of dollars in debt that it had accumulated in recent years from building and buying malls in 44 states.
For now, the company says none of its 200 malls is closing. However, analysts say some properties could be sold to raise funds needed to keep the rest afloat and to form a company that's able to exit bankruptcy. "It's conceivable that some of our strongest assets could be sold, but we want to keep a platform intact," Tom Nolan, president and ceo, told the Associated Press.
In recent months, the company has tried to sell some properties, but interested parties have had problems securing financing, says Nolan.
General Growth’s bankruptcy is one of the largest in U.S. history. Its $27 billion in debt is spread out into individual mortgages for each mall and unsecured bonds at the corporate level. "We're at this point today because we have a credit crisis,” says Nolan. “Our operating properties are performing very well."
The average General Growth mall occupancy rate is 92.5 percent, the company's highest in 15 years.