General Growth Postpones Summerlin Opening

General Growth Properties has delayed the opening of its 1.4 million-square-foot Las Vegas regional mall development, the Shops at Summerlin Centre (pictured), by perhaps a much as a year. Such a delay would push the opening of the property to 2010, when General Growth anticipates a stronger financial and retail

General Growth Properties has delayed the opening of its 1.4 million-square-foot Las Vegas regional mall development, the Shops at Summerlin Centre (pictured), by perhaps a much as a year. Such a delay would push the opening of the property to 2010, when General Growth anticipates a stronger financial and retail environment. “If we had stuck to our original opening date, I think we would have opened that center probably around 70 percent, maybe 75 percent [occupied],” Robert Michael, president of the Chicago-based REIT, said recently during a conference call. “I think by delaying it… this project will open 90 percent to 92 percent [or] 93 percent.” Michael further said that “we’ve had these discussions with the retailers, [who] almost universally said they would prefer to open in 2010 versus 2009. So that’s really what we took our cue from. The extra time, I think, is a prudent thing to do not only for us, but for the retailers. The end result is that we will just have much, much stronger openings.” During the same call, company CFO Bernard Freibaum acknowledged that the availability of construction financing will be a wild card in a year’s time, but he said that the company anticipates that over 50 percent of the project cost will have already been expended by then, and that the majority of the space will be preleased as well. “While we can’t be certain that such construction financing will in fact be available in one year, we believe that these projects will be highly desirable financing candidates,” Freibaum said. “Historically, more than 50 percent equity and more than 50 percent preleased… would satisfy even the most stringent construction loan underwriting.” This spring, as reported by CPN,GGP added two anchors to the retail lineup at the Shops at Summerlin Centre, Macy’s and Dillard’s. The two department stores joined previously announced anchor Nordstrom, along with specialty home furnishings department store Crate and Barrel, as confirmed retailers. During the conference call Michaels confirmed those retailers’ commitment to the development. “This project will be a great project, anchored by Nordstrom, Macy’s, Dillard’s, Crate & Barrel–all those deals are totally firm,” he said. Freibaum spoke about the broader economic uncertainty as it’s affecting the retail industry in general, and GGP specifically. “There are, in fact, some people who project that the current economic conditions and the severely constrained and limited supply of commercial mortgage financing will never improve,” he said. “Our initial inclination is not to attempt to console inconsolable people. “However, the main reason that we will be able to get through the time that it will take to heal the damaged financial markets is that the substantial majority of our debt maturities are existing mortgages on high-quality malls with stable and predictable cash flow,” he continued. “The average expiring loan to value levels are low, even when you use the lower leverage standards for loans that can be still be obtained in the current difficult environment.”