Summerlin development company, mall owner sees stock tumble

The Home News

Tuesday, Sept. 23, 2008 | 9:54 a.m.

The turmoil in the U.S. economy is taking its toll on Summerlin developer and Las Vegas mall owner General Growth Properties Inc. of Chicago.

Its stock tumbled 25 percent Monday, but rose 9.45 percent to $17.60 today after the stock was added to the government’s list of stocks to be protected against short sellers.

Short sellers are blamed for much of the turmoil on Wall Street. They borrow stock at current prices with plans to repay it later, betting its price will fall so they can earn a profit. This tends to hurt share prices.

General Growth’s stock fell Monday when it announced plans to evaluate its alternatives, both financial and strategic, "in an effort to align the market value of the company’s common stock more closely with the intrinsic value of the company’s stable, high quality portfolio of real estate assets in good locations with significant barriers to entry."

General Growth said it’s "developing a comprehensive, strategic plan to generate capital from a variety of potential sources including, but not limited to, both core and non-core asset sales, the sale of joint venture or preferred equity in selected pools of its assets, a corporate-level capital infusion, and/or strategic business combinations."

This means that General Growth would consider selling assets to pay down debt and may consider a merger or other business combination.

Monday's announcement followed a plunge in General Growth’s stock price last week.

MarketWatch.com reported its stock slid 34 percent on Thursday, which forced General Growth executives to sell more than 2.4 million shares to cover margin calls. The decline came after disclosures that it granted a concession in a $1.5 billion loan it will use to replace other debt, MarketWatch.com said.

In Las Vegas, General Growth owns the Howard Hughes Corp., developer of the massive Summerlin planned community. It’s also the largest mall owner in Nevada. In Las Vegas, it owns the Fashion Show, Meadows and Boulevard malls, along with the Grand Canal Shoppes at the Venetian and the Shoppes at the Palazzo. It’s also developing the Summerlin Centre mall. That mall was due to open in 2009, but General Growth is delaying the opening until 2010.