Source : Business Times - 23 Sep 2008
General Growth may sell assets or shares after stock slumps
General Growth Properties Inc, the second-largest US mall owner, said that it may sell assets or equity to raise capital after the company’s shares slumped.
General Growth will also consider ’strategic business combinations’ to boost its stock, the Chicago-based company said yesterday in a statement.
The real-estate investment trust is ‘developing a comprehensive, strategic plan to generate capital from a variety of potential sources’, the statement said.
General Growth declined in four of the last five days of New York Stock Exchange trading on concern that the company will not be able to refinance debt or raise capital.
In yesterday’s statement, General Growth said that it will ‘actively pursue’ sources of financing to meet the company’s short-term obligations.
The company has a higher debt-to-asset ratio than Simon Property Group Inc, the largest US mall owner, and there is a ‘real threat’ of insolvency, Rich Moore, an analyst at RBC Capital Markets in Cleveland, said last week.
General Growth has declined 44 per cent in six months, reducing the company’s market value to US$5.73 billion. The Standard and Poor’s 500 Index has dropped 7 per cent during that period.
The company said last Wednesday that it had obtained additional mortgage financing under a US$1.75 billion facility.
General Growth has two mortgages totalling US$180 million due next month, chief executive officer John Bucksbaum said in an interview a day later.
The company said yesterday that occupancy reached a record 93.2 per cent in the second quarter, contributing to an increase in comparable net operating income.
General Growth said that it expects to be in a position to offer long-term, fixed-rate mortgage financing to banks by the end of November.
The additional mortgage financing under a US$1.75 billion facility, which the company obtained, brought the amount outstanding under the facility to US$1.51 billion.
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