General Growth Properties Inc. shares plummeted Tuesday after the mall owner warned it faces solvency trouble and may be forced to file for bankruptcy if it can't refinance or extend nearly $1 billion in debt due next month.
The real estate investment trust, which is the nation's second-largest mall owner whose big-name holdings include Chicago's Water Tower Place and Fashion Show in Las Vegas, also disclosed in a regulatory filing late Monday that it may default on certain debt obligations.
Making matters worse is another $3.07 billion in property and corporate debt slated to come due next year.
"Given the continued weakness of the retail and credit markets, there can be no assurance that we can obtain such extensions or refinance our existing debt or obtain the additional capital necessary to satisfy our short-term cash needs on satisfactory terms," the Chicago-based REIT said in filing with the Securities and Exchange Commission. "... Our potential inability to address our 2008 and 2009 debt maturities in a satisfactory fashion raises substantial doubts as to our ability to continue as a going concern."
General Growth, beset by falling funds from operations and plagued by a tightening global credit market that's making it difficult for companies to obtain financing, is trying to sell off properties and cut costs to weather the rocky economic climate. It's also suspended its dividend and ousted a cadre of top executives. But that hasn't calmed investors, who've sent the company's shares into a virtual free-fall since September.
After filing the quarterly report late Monday, the company's shares shed another 76 percent Tuesday, reaching an all-time low of 33 cents per share before recovering slightly.
Spokesman David Keating couldn't immediately comment Tuesday.
Citigroup analyst Michael Bilerman said General Growth's equity holders may still be at risk, even the company opts not to file for bankruptcy protection.
"There is no quick fix in the current capital-constrained environment," he told investors late Monday night.
General Growth shares fell 88 cents to close at 49 cents per share in trading Tuesday.