Retailers Say They Have No Plan To Leave General Growth Malls
April 16 2009 - 12:53PM
Dow Jones News
General Growth Properties Inc.'s (GGP) big retail tenants say
they are so far standing by the mall operator as it enters what
could be a lengthy and historic bankruptcy restructuring.
J.C. Penney Corp. (JCP), Macy's Inc. (M) and Bon-Ton Department
Stores Inc. (BONT), which each have 10% or more of their stores in
General Growth malls, say the filing hardly caught them unaware -
given General Growth's very public problems with its debt load -
and they will sit pat, while closely watching as Chapter 11
bankruptcy proceedings unfold.
General Growth "has been a good mall operator for us," said J.C.
Penney spokeswoman Darcie Brossart. "As long as the malls continue
to be operated properly, we do not foresee any issues."
J.C. Penney has 111 of its 1,101 stores in General Growth malls,
according to a regulatory filing by General Growth.
Bon-Ton "has been corresponding with (General Growth), and based
on their responses we do not anticipate impacts" from the
bankruptcy filing, said the department store chain's spokeswoman
Mary Kerr.
Bon-Ton has a "very astute" person in charge of real estate to
monitor the bankruptcy's progress and the condition of General
Growth's malls, Kerr said.
To Macy's, the Chapter 11 filing "doesn't really affect us,"
said spokesman Jim Sluzewski. "We're still making payments at the
malls on leases, which are typically long-term."
Macy's has 106 of its 840 stores in General Growth's malls.
The retailers' spokespeople declined to discuss whether their
companies could or planned to use the bankruptcy filing as a way of
gaining leverage with General Growth to renegotiate leases or
receive other concessions.
General Growth's other big tenants include Sears Holdings Corp.
(SHLD), Target Corp. (TGT) and Dillard's Inc. (DDS), a regulatory
filing said.
The collapse of General Growth Properties, which operates more
than 200 properties, is being called by analysts the largest ever
failing by a mall operator.
General Growth is the second largest mall operator in the U.S.
behind Simon Property, and General Growth's failure was caused by
carrying too much debt, with its cash flow strained as retailers
engaged in less expansion and consumers cut back spending.
The bankruptcy filing isn't seen as leading to a big closing of
General Growth's malls. The company itself may well reorganize and
better-capitalized mall operators may pick up some of the
locations, analysts said.
General Growth's malls are viewed as being of generally high
quality, and posted an occupancy rate of 92.5% as of last year's
fourth quarter.
Shares of General Growth have been halted from trading after
falling 52% to 50 cents in the premarket.
J.C. Penney was recently up 3.06% to $25.94, Macy's was ahead
5.5% to $12.20 and Bon-Ton was off 2.29% to $1.71.
-By Karen Talley, Dow Jones Newswires; 201-938-5106;
karen.talley@dowjones.com