General Growth Refinances $900M in Debt, Still Endures Finance Hurdle

Struggling mall operator General Growth Properties Inc. had refinanced nearly $900 million in mortgage loans, but was still unsure if it could get an extension from lenders for another $900 million in debt on two Las Vegas properties due the same day.General Growth completed approximately $896 million of mortgage loans with maturity rates ranging from five to seven years. The company said proceeds were used to retire a $58 million bond issued by The Rouse Co. L.P., maturing Thursday, Dec. 11. Proceeds were also used to refinance about $814 million of mortgage debt scheduled to mature in 2009. General Growth bought Rouse in 2004 for $12.6 billion and took on $5.4 billion in debt.The company issued a release Friday stating that the refinanced loans are separate from the nearly $900 million in mortgage loans due on The Fashion Show and The Palazzo malls in Las Vegas.  As reported by CPN earlier this month, General Growth had received a two-week extension with a six-lender consortium to push back the maturity date on the loans for the two Las Vegas Strip malls. The REIT then put both malls up for sale along with the Grand Canal Shoppes, also in Las Vegas. General Growth has been carrying a debt load of about $27 billion, built up to pay for acquisitions. Other than the $58 million in bonds paid off this week, the schedule requires the company to pay $3.3 billion next year, $4.5 billion in 2010 and $8.4 billion in 2011, according to the Wall Street Journal.Additionally, General Growth continues discussions with its syndicate of lenders for another extension of the Fashion Show and Palazzo malls debt. Meanwhile, Fitch Ratings said this week that default of some kind appears “imminent” and that it expected a distressed debt exchange would eventually occur. Under the distressed debt exchange, General Growth would be forced to restructure its debt obligations in order to avert bankruptcy, or it would be unable to pay debt currently due. In either scenario, Fitch considers that a default. Fitch, which lowered the REIT’s rating this week, has General Growth on its Negative Rating Watch list.In more bad news for General Growth this week, the Los Angles-based law firm of Glancy Binkow & Goldberg L.P.  announced it had filed a class-action lawsuit on behalf of investors who had purchased General Growth securities between April 30, 2008, and Oct. 26, 2008. The lawsuit accuses the company and several executive officers of making false and misleading public statements that had caused the stock price to become artificially inflated. The stock has collapsed in recent weeks, trading as low as 24 cents. With today’s partial good news, traders are pushing the stock up. Shortly before 1 p.m. Eastern time Friday, it was trading at $1.85, up 41 cents or 28.5 percent, on the New York Stock Exchange.Chicago-based General Growth has an ownership interest in or management responsibility for a portfolio of more than 200 regional shopping malls in 44 states. The portfolio is comprised of 200 million square feet of retail space. General Growth also owns master planned community developments and commercial office buildings.