Central Valley mall owner worries about paying loans

CHICAGO, ILL.
November 12, 2008 8:29am

General Growth Properties Inc., which owns or manages six shopping malls in the Central Valley, is cautioning that it might face defaulting on some loans.

“We may not be able to refinance or repay our substantial indebtedness, which could have a materially adverse affect on our business, financial condition, results of operations and common stock price,” the Chicago, Ill.-based company says in a filing with the Securities and Exchange Commission.

As of the end of the company’s third quarter, Sept. 30, it had approximately $1.13 billion in debt maturing this year plus another $3.07 billion in debt maturing in 2009.

“Due to the continued weakness in the credit markets, there can be no assurance that we will be able to refinance this debt on acceptable terms or otherwise,” the filing says.

GGP, the owner of more than 200 malls and other property nationwide, says it’s been hammered by a combination of recent downgrades in its debt by national credit rating agencies as well as the “real or perceived decline in the value of our properties based on deteriorating general and retail economic conditions.”

It notes that economic conditions continue to weaken. “We expect this weakness to continue and worsen in 2009 as the economy enters a recessionary or near recessionary period.”

The landlord says it expects some of its retail tenants to have trouble paying their rent under these conditions.

“There is a significantly increased risk that the sales of stores operating in our centers will decrease, negatively affecting their ability to make minimum rent payments and increasing the risk of tenant bankruptcies,” the SEC filing says. “These circumstances negatively affect our revenues and available cash, and also reduce the value of our properties, reducing the likelihood that we would be able to sell such properties, on attractive terms or at all.”

In the Central Valley, GGP owns or manages:

• Valley Plaza Mall in Bakersfield

• Visalia Mall in Visalia

• West Valley Mall in Tracy

• Elk Grove Promenade in Elk Grove

• Palladio at Broadstone, in Folsom

• Chico Mall in Chico

GGP says it is trying to find the money to meet the oncoming due dates on its loans, but may not be successful.

If lenders don’t cut it some slack, “our assets may not be sufficient to repay such debt in full, and our available cash flow may not be adequate to maintain our current operations.”