It can’t be much fun at General Growth Properties these days. Each day the business press writes about their continuing struggles to refinance the massive debt they incurred when they acquired The Rouse Company back in 2004. Every article also mentions that the fact that the company is on the brink of bankruptcy. Just last week, Citicorp foreclosed on the 360,000 square foot Oakwood Center mall in Gretna, Louisiana. Others have since followed.
What does all this mean for the redevelopment of Town Center?
My crystal ball is no better than other prognosticators but I do have a couple of thoughts based on things I’ve observed so far.
1) GGP will likely emerge from this financial crisis as a much smaller company. The company has already demonstrated a willingness to sell off some of their trophy retail properties such as the Fashion Show Mall in Las Vegas and Harborplace in Baltimore. Simon Property Group, a retail REIT with a strong balance sheet, is likely to pick up a at least a few of the better performing traditional malls while The Cordish Companies is a likely suitor for some of the company’s urban marketplaces.
2) In all of the discussion on the sale of assets to raise cash, the sale of their master planned communities’ properties has never been mentioned. It could very well be that GGP sees these developments as the key to the survival and future growth of the company. Despite their financial travails, the company has continued to spend money on moving the Town Center redevelopment program through the county approval process. This is no small matter in company that is trying to conserve cash.
The bottom line is that the redevelopment of Town Center still seems like a good bet. Retail development has been drifting away from the regional mall model towards the mixed use community model. It appears that GGP may have already figured that out.