General Growth Properties Problems Affect Las Vegas

General Growth Properties Problems Affect Las Vegas

General Growth Properties' problems are affecting several Las Vegas projects. General Growth Properties is the 2nd largest REIT in the country with a portfolio of more than 200 regional shopping malls in 45 states. The Echelon Resort's construction was delayed partly due to General Growth Properties' inability to obtain financing for the retail end of the project. General Growth also said that it will delay development of the 1.4 million square foot regional mall, the Shops at Summerlin Centre which is near the Red Rock Resort and Casino. The Chicago-based company also owns the Fashion Show Mall, Grand Canal Shops at the Venetian, the Shoppes at the Palazzo, the Meadows and the Boulevard Mall.

General Growth has been affected by the deteriorating credit markets and a declining retail sales market. A number of potential tenants have been delaying signing leases until the economy improves.

Reggie Middleton of the Boom Bust Blog believes that General Growth is facing incredibly difficult debt situation. General Growth has $24 billion in long term debt of which $2.5 billion in due by year end 2008, $3.3 billion in 2009 and $4.5 billion due in 2010. The debt is coming due at a time when the credit markets are dry, real estate values are stagnant or in decline and low consumer confidence is squeezing retailers who rent space in General Growth malls and other shopping centers across the country. Reggie Middleton does not believe that the company can pay off its debt or refinance it.

The stock hits its 52-week low on August 4, 2008 at 26.24 and closed at 27.48 on August 8, 2008. The price drop has caused a margin call for several of the company's executives. Clearly, the market does not expect much from the company in the near term.

John Laub is the President of the CEO-CFO Group.


1. "General Growth Faces Financial Shortfall. Mall Company Delays Developments as Mounting Debt Comes Due." Benjamin Spillman. The Las Vegas Review Journal. August 9, 2008.

2. "GGP Shenanigans: How Much Value Do You Place on the Credibility of Management?" Reggie Middleton. Reggie Middleton's Boom Bust Blog.. http://boombustblog.com. August 6, 2008.

3. 10Q Filed August 8, 2008. General Growth Properties Inc.