General Growth Properties
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| Former type | Public (Pink Sheets: GGWPQ) |
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| Genre | Malls, shopping centers, outlet malls |
| Fate | Bankrupt |
| Founded | 1954 |
| Founder(s) | Martin Bucksbaum Matthew Bucksbaum |
| Defunct | 2009 |
| Headquarters | Chicago, Illinois United States |
| Number of locations | 45 U.S. states |
| Key people | Adam Metz-CEO Tom Nolan-President and COO |
| Industry | real estate investment trusts |
| Revenue | US $3.38 billion |
| Net income | US $287 million |
| Employees | 3,500 |
| Website | ggp.com |
General Growth Properties (Pink Sheets: GGWPQ) is a publicly traded real estate investment trust in the United States. It is based in Chicago, Illinois at 110 North Wacker Drive, a historic building designed by architectural firm Graham, Anderson, Probst & White.[1] The company owns and manages shopping malls throughout the United States. On April 16, 2009, General Growth Properties along with 158 of its properties filed for the largest real estate bankruptcy in US history.
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[edit] Properties
General Growth Properties owns, has interest in, or manages more than 200 regional shopping malls in forty-five states. It also has interest in seven master planned communities: Columbia, Emerson, Fairwood and Stone Lake in Maryland; Summerlin in Nevada; and, Bridgeland and The Woodlands in Texas.[2] General Growth is also beginning the process for the development of a new community in Hawaiʻi: the Ward Neighborhood Master Plan.[3]
General Growth owns the largest open-air shopping mall in the world, Ala Moana Center in Honolulu, Hawaiʻi.[4][5][6] Ala Moana Center is also a flagship of a General Growth Properties tourism program called "America's Premier Shopping Places." It lists fifty tourist destinations that include the historic Faneuil Hall Marketplace in Boston, South Street Seaport in New York City and Water Tower Place in Chicago.[7] General Growth Properties has classified twenty-two malls as "Platinum Properties"; these malls are occupied by consist of luxury brand stores such as Tiffany, Lord & Taylor, Neiman Marcus, Louis Vuitton, Saks Fifth Avenue, Hugo Boss, and Barneys New York.[8]
[edit] History
The company was founded by two brothers, Martin and Matthew Bucksbaum, in 1954. That year, they opened their first shopping center, Town & Country Shopping Center in Cedar Rapids, Iowa.[9] In 1960, General Management opened its second center, Duck Creek Plaza in Bettendorf, Iowa; this was their first mall to have a department store (Younkers) as an anchor.
In 1970, General Management became General Growth Properties (GGP). Two years later GGP became a publicly traded company on the New York Stock Exchange. However, by 1984, management felt that the company's stock price did not fully reflect the value of its business. So management decided to sell the company's assets and take the company private. That GGP they sold 19 malls to Equitable Real Estate in an $800 million deal – considered the largest single real estate transaction in the United States at that time – but continued to manage the malls as part of the deal. Ultimately, shareholders realized a 22% internal rate of return on their investment from the original initial public offering (IPO) through 1984. GGP issued another public offering in 1993 to raise money for future expansion plans. In 1995, GGP moved its headquarters from Des Moines, Iowa, to Chicago.
Starting in 1993, GGP expanded its portfolio dramatically by acquiring existing properties and constructing new malls. On November 12, 2004, GGP acquired The Rouse Company in the largest retail real estate merger in American history. GGP grew to be the nation's second-largest mall operator.
Co-founder and CEO Martin Bucksbaum died in 1995 (only a month after negotiating a major deal with Sears Roebuck). He was succeeded as CEO by Matthew Bucksbaum. Matthew retired in 1999, and was succeeded by his son John.
[edit] Company debt crisis
GGP reported in excess of $25 billion in debt (mostly mortgages) as of September 30, 2008. In late November 2008, GGP missed a deadline to repay $900 million in loans backed by two Las Vegas retail properties. This meant that GGP lenders could issue a notice of default, which would make GGP seek protection from its creditors under Chapter 11 bankruptcy.
In December 2008 the Wall Street Journal reported that GGP would seek bankruptcy protection if it could not renegotiate its loans.[10] Its share price had fallen by 97% over the previous six months.
[edit] Exit of Bucksbaum family
The company's problems forced the ouster of CEO John Bucksbaum, though he remained chairman of the board. On October 26, 2008, Bucksbaum resigned after the GGP board learned that the family trust violated company policy by providing loans to company officers without notifying the board. [10] Director Adam Metz became CEO.[10] The value of the Bucksbaum family fortune shrank by 97 percent since December 2007.[11]
[edit] Bankruptcy
GGP failed to reach a deal with its creditors; and on April 16, 2009, filed for Chapter 11 bankruptcy: the largest real estate bankruptcy since at least 1980, and the largest ever failing by a mall operator. [12]
According to its bankruptcy filing, GGP had about $29.6 billion in assets at the end of 2008, and $27.3 billion in debt. GGP suspended its dividend, halted or slowed nearly all development projects and cut its work force by more than 20%. GGP also sold some of its non-mall assets. Chief Executive Adam Metz said "While we have worked tirelessly in the past several months to address our maturing debts, the collapse of the credit markets has made it impossible for us to refinance maturing debt outside of Chapter 11."[13] GGP obtained $375 million in debtor-in-possession financing. [14] Mall gift cards remained usable.[15]
On November 19, 2009, it has been reported that GGP may be acquired by its larger rival Simon Property Group in a deal that may be worth up to $30 billion if GGP is acquired in its entirety.[16] Simon has hired property investment firm Cohen & Steers, as well as the Lazard investment bank and the Wachtell Lipton Rosen & Krantz law firm to explore the possibility of acquiring GGP.
[edit] See also
[edit] References
- ^ 2 December 2008 Chicago Architecture Info General Growth Properties page
- ^ 2 December 2008 General Growth Properties Master Planned Communities page
- ^ 16 December 2008 Honolulu Star-Bulletin article
- ^ 19 September 2007 Ala Moana Center press release
- ^ 27 June 2007 Travelvideo.tv article
- ^ 13 December 2006 Honolulu Advertiser article
- ^ 16 April 2009 America's Shopping Places website list of malls
- ^ 2 December 2008 General Growth Properties Platinum Properties page
- ^ http://www.findarticles.com/p/articles/mi_go1572/is_200312/ai_n6640710 Business Record (Des Moines), December, 2003 - General Growth Properties Inc., by Stephen McIntire
- ^ a b c Frank, Robert; Kris Hudson (2008-12-09). "Dark Days for Mall Dynasty: The Fallen Bucksbaum Family". The Wall Street Journal. http://online.wsj.com/article/SB122875588694888349.html. Retrieved 2008-12-09.
- ^ Harper's Magazine
- ^ http://dealbook.blogs.nytimes.com/2009/04/16/general-growth-properties-files-for-bankruptcy/?ref=global-home
- ^ http://www.google.com/hostednews/ap/article/ALeqM5jCY8PjJjZxNxC33tqNc6cf9g4-RAD97JQITG4
- ^ http://www.chicagorealestatedaily.com/cgi-bin/news.pl?id=33713
- ^ http://www.nj.com/business/index.ssf/2009/04/mall_gift_cards_still_good_des.html
- ^ Simon eyes General Growth’s mall portfolio
[edit] External links
- General Growth's official website
- General Growth's Property Locator Map
- Yahoo! Finance - General Growth Properties
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