Tuesday, November 11, 2008

Valley Plaza Mall owner on the verge of collapse

Valley Plaza & GGP:

Valley Plaza is located approximately 110 miles north of Los Angeles, in Bakersfield, the gateway to northern, southern and eastern California. Valley Plaza is the preferred shopping destination of residents of central California with a trade area expanding an average of 28 miles in each direction.

Mall Owner Is Warning of Default

Ailing mall owner General Growth Properties Inc. warned Monday in a government
filing that its failure to refinance or extend $1 billion in debt due this month could trigger default on billions of dollars in debt and its ability to continue operations would be in "substantial doubt."General Growth has $900 million in debt coming due Nov. 28 on two luxury malls on the Las Vegas strip. It has another $58 million in bonds due on Dec. 1.

From the GGP 10-Q on the economy:

Deteriorating economic conditions will have an adverse affect on our revenues and available cash, and may also impair our ability to sell our properties. General and retail economic conditions continue to weaken, and we expect this weakness to continue and worsen in 2009 as the economy enters a recessionary or near recessionary period. Consumer spending recently declined for the first time in 17 years, the unemployment rate is expected to rise, consumer confidence has decreased dramatically and the stock market remains extremely volatile. Given these expected economic conditions, we believe there is a significantly increased risk that the sales of stores operating in our centers will decrease, negatively affecting their ability to make minimum rent payments and increasing the risk of tenant bankruptcies. In addition to the direct adverse effect of tenant failures to pay minimum rents and tenant bankruptcies on our operations, these events also negatively affect our ability to attract and maintain minimum rent levels for new tenants. These circumstances negatively affect our revenues and available cash, and also reduce the value of our properties, reducing the likelihood that we would be able to sell such properties, on attractive terms or at all.


Ichabod said...

From what I remember, I think Valley Plaza isn't "owned" by General Growth Properties, but merely managed by them. I could be wrong.

Bakersfield Bubble said...

Local news is now reporting the story.