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General Growth "Almost Literally Worth Nothing"

General Growth Properties (GGP), the Chicago-based company that's the nation's second-largest owner of shopping malls, is almost literally worth nothing. It's debt totals $24 billion, much of it loaded onto the balance sheet with its 2004 purchase of a major competitor, Rouse. And $24 billion is almost exactly what the company says its malls are worth, an implausible figure given that anything the company sells now carries the scent of desperation.

But it must sell assets or take on partners, diluting shareholder stakes, if it is to survive. Its recent history of how the founding Bucksbaum family let the company spin wildly out of control is a cautionary tale of how debt can consume a company. General Growth was more than its name. It describes its damnation.

Chairman John Bucksbaum and his former chief financial officer, Bernard Freibaum, thought the debt markets would stay forever friendly and they could refinance and change terms at will. Bucksbaum never imagined that there could be a freezing of the credit markets, or that the situation would get so bad as to imperil consumer spending, the source of GGP wealth.


(Hat tip Dirt Lawyer's Blog.)

Here are some links to older stories for reference:

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Elaine Misonzhnik

Senior associate editor Elaine Misonzhnik has been writing for National Real Estate Investor since June 2006 and has covered commercial real estate for more than 12 years. She first became...
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