General Growth stock closes down 64 percent

By Jeff Pope

Published Tuesday, Nov. 11, 2008 | 11:21 a.m.

Updated Tuesday, Nov. 11, 2008 | 2:30 p.m.

General Growth Properties Inc. of Chicago, developer of the Summerlin planned community and owner of several Las Vegas shopping malls, said Monday it may seek protection from creditors if it cannot refinance some of its debt.

As a result of the potential bankruptcy warning, its stock fell 88 cents, or 64 percent, on Tuesday. It closed at 49 cents per share, compared to about $51 one year ago.

In Las Vegas, General Growth owns the Howard Hughes Corporation, developer of Summerlin. It also owns two regional malls, the Boulevard and Meadows; and three malls on the Las Vegas Strip: Fashion Show, Grand Canal Shoppes and the Shoppes at the Palazzo.

It is developing another regional mall, the Shops at Summerlin Centre, but construction has slowed on that project recently.

General Growth is marketing for sale its malls on the Strip but has not commented on any plans for the Boulevard and Meadows malls.

In a regulatory filing Monday, General Growth said: "Our potential inability to address our 2008 or 2009 debt maturities in a satisfactory fashion raises substantial doubts as to our ability to continue as a going concern." It warned it may need to seek "legal protection from our creditors."

General Growth also reported a significant slowdown this year in land sales in its planned communities around the nation including Summerlin, a community of 22,500 acres with 7,700 acres remaining to be sold.

Despite the financial troubles of its parent company, Summerlin remains attractive to investors, said real estate industry observer Dennis Smith, founder and CEO of Home Builders Research Inc. of Las Vegas.

A General Growth bankruptcy wouldn't necessarily affect the value of its real estate holdings, he said.

"The value of the land is going to be whatever somebody is willing to pay for it," he said. "It just depends more on the market conditions more so than the bankruptcy situation.

"Investors like to invest when prices are their lowest. So is this a good time to invest? One would think so."

Jeff Pope can be reached at 990-2688 or [email protected].