Now, deep-pocketed buyers are likely to be few and far between given a continuing credit crunch that is stretching the balance sheets and hurting returns for most real estate developers. This could make it more difficult for General Growth to sell its high-quality malls at attractive prices at a time when they'll need to raise a lot of liquidity.
General Growth, the second-largest public mall operator in the U.S., remains in talks with its lenders to extend four loans that are past due. The company has warned in Securities and Exchange Commission filings it might need to seek Chapter 11 bankruptcy protection if it fails to win deadline extensions on maturing loans. That worst-case scenario would rank among the largest real-estate collapses in history.
A Chapter 11 filing would have very little implications for the solvency of General Growth's competitors, but "has the potential to ... create some compelling acquisition opportunities for other retail" real-estate investment trusts, said Steven Marks, head of REITs at Fitch Ratings. He noted the company had about $30 billion in assets as of the end of September.