WASHINGTON — A troubled mall operator is putting prominent retail centers in Boston, New York and Baltimore up for sale in a desperate attempt to shore up its finances.
Chicago-based General Growth Properties Inc. has hired a New York-based commercial real estate firm to put the well-known retail centers up for sale.
New York brokerage DTZ Rockwood LLC said last week it has been retained to sell off New York's South Street Seaport, Boston's Faneuil Hall Marketplace and Baltimore's Harborplace & The Gallery, all three of which are prominent tourist destinations.
The three properties combined generated about $300 million in retail sales for the year ending Sept. 30, according to DTZ's materials, which bill the properties as an "unprecedented investment opportunity."
3 were urban renewalsAll three locations were developed by the Maryland-based Rouse Co. as part of urban renewal efforts in the 1970s and 1980s. General Growth took over all of Rouse's assets in a $7.2 billion acquisition in 2004.
The potential sale, however, comes at a time when there are few buyers for real estate of any kind. Plus, with the U.S. economy sinking, rents and vacancies at shopping centers and office buildings are expected to suffer next year.
Worse still, about $36 billion of commercial real estate debt will expire next year, and about $55 billion of debt on average will roll over annually by 2012.
All three properties are at or near their cities' waterfronts and were developed by James Rouse, who gained acclaim for leading urban development efforts. Rouse, who died in 1996, also developed the planned city of Columbia, Md.
General Growth, the country's second-largest mall owner, is saddled with huge amounts of debt it took on during the real-estate market's boom years when it aggressively bought up assets. Refinancing that debt has proven difficult.
Analysts are unsure whether new managers, installed in late October, will be able to keep the company afloat as the recession drags on and U.S. retailers struggle. The company last month ousted its chief executive, president and chief financial officer and hired law firm Sidley Austin as an adviser.
Stock value tumblesLast week, General Growth received another extension on $900 million in loans for two Las Vegas properties.
Lenders agreed to place the loans in forbearance until Feb. 12 as the Chicago company looks to sell some of its assets or raise fresh capital to help pay upcoming debt maturities.
The mortgages cover two Las Vegas malls, Fashion Show and Palazzo. The company is also trying to sell its Las Vegas locations.
General Growth has a stake in more than 200 shopping malls in 44 states.
The company's stock has lost more than 95 percent of its value in the past six months.
Richard D. Hastings, a strategist with Global Hunter Securities, expects total retail sales will fall as much as 8 percent for the November through January period. "Consumer demand is much less than most of us understood even in September," said Hastings, who says the spending malaise is unlikely to hit bottom until the second half of 2010.
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