bankruptcy

General Growth rejects Simon’s $10B offer

General Growth Properties Inc., owner of Honolulu’s Ala Moana Center, has rejected a $10 billion offer to sell to rival Simon Property Group.

But the nation’s second-largest mall owner did not reject outright Simon’s overtures and indicated it would consider being acquired as part of its efforts to emerge from Chapter 11 bankruptcy protection. Indianapolis-based Simon is the nation’s largest mall owner.

General Growth CEO Adam Metz, in a letter to rival Simon CEO David Simon, said the company remains committed to restructuring its debt but will not allow Simon to derail that process.

Metz said Simon’s offer “is not sufficient to preempt the process we are undertaking to explore all avenues to emerge from Chapter 11 and maximize value for all the company’s stakeholders.”

Chicago-based General Growth made the letter public in a press release issued Tuesday evening in response to Simon’s decision to publicize its acquisition offer. General Growth filed for bankruptcy protection in April 2009.

Simon, which owns the Waikele Premium Outlets on Oahu, said Tuesday it has offered to acquire General Growth for $10 billion, including $9 billion in cash. The offer would give General Growth creditors $7 billion in consideration.

Shareholders would get more than $9 a share, including $6 a share in cash.

General Growth owns or manages more than 200 regional shopping malls in 43 states, including Ala Moana Center, Ward Centre, Ward Entertainment Center and Ward Gateway Village in Honolulu and Prince Kuhio Plaza in Hilo. The company also manages Windward Mall on Oahu; King’s Shops at Waikoloa Beach Resort and Queens’ Marketplace on the Big Island; and Whaler’s Village and Queen Kaahumanu Center on Maui.

Source: PBN

bankruptcy

Simon looking at General Growth assets

Simon Property Group Inc. has hired outside advisers to help it weigh its options regarding the possible acquisition of assets from fellow shopping mall owner General Growth Properties.

Chicago-based General Growth, operating under bankruptcy protection since April, owns or holds a stake in about 200 malls across the country. In addition to owning and managing the Ala Moana Center and the Ward Centers in Honolulu, General Growth also manages Windward Mall and Kapolei Commons on Oahu; King’s Shops at Waikoloa Beach Resort and Queens’ Marketplace on the Big Island; and Whaler’s Village and Queen Kaahumanu Center on Maui.

Indianapolis-based Simon Property owns nearly 400 properties, including Waikele Premium Outlets.

General Growth filed for bankruptcy protection under the weight of debt it was unable to refinance when the credit markets froze. Its financial problems stem, in part, from a local deal, when it financed its $11 billion acquisition of Columbia-based Rouse Co. largely with debt.

Simon Property spokesman Les Morris confirms the company has hired Lazard Ltd. and Wachtell, Lipton, Rosen & Katz as advisors on a possible General Growth acquisition.

General Growth reported a $117.8 million third quarter loss. Simon Property (NYSE: SPG) had third quarter net income of $105.5 million.

Simon Property and Farallon Capital Management acquired Chevy Chase-based The Mills Corp. in 2007 for $1.6 billion.

Source: PBN

bankruptcy

Developer owes money to Hawaii hotel’s high bidder

The connection between Unity House and developer Brian Anderson goes deeper than its high bid this week of $8.5 million at a foreclosure auction for The Lotus at Diamond Head hotel.

Anderson owes the nonprofit organization several million dollars from a 5-year-old loan, and Unity House was in talks earlier this year to buy the former W Honolulu hotel from Anderson as a means to settle the debt.

“We initially got onto this because Brian owed us money,” said Unity House Chairman Jim Boersema. “We considered a number of options and one of them was the W hotel.”

The money owed is more than $4.5 million, according to documents from a lawsuit Unity House filed in June 2008 that is still pending in 1st Circuit Court.

Unity House was unable to work out a final agreement between Anderson and First Hawaiian Bank and Central Pacific Bank, which held mortgages on the property totaling more than $10 million.

After the first foreclosure auction, scheduled for June, was delayed, Unity House took another look at attempting to acquire the hotel.

“We basically decided a few weeks ago,” Boersema said. “We’ve liked the property; we think in the long run it’s going to be a good investment.”

Anderson’s company, Anekona W, purchased the hotel, which sits on leased and fee-simple land on Kalakaua Avenue’s Gold Coast, from Colony CSR Investors LP on Aug. 17, 2004, nearly five years to the day before Tuesday’s auction.

First Hawaiian Bank filed for foreclosure on the property in October, saying it was owed more than $4.9 million in principal, fees and interest from a $5 million loan. Central Pacific Bank also is owed about $5 million on a second mortgage. The sale to Unity House must be confirmed at a hearing in about 30 days, at which time other parties could still outbid the nonprofit.

The hotel was worth between $10.2 million, according to an appraisal ordered by Central Pacific Bank, and $16 million, the figure in an appraisal ordered by Unity House, which assumed the conversion of the 51 rooms into condominium hotel units.

Unity House had loaned Anderson $2.5 million in 2004, with an interest rate of 30 percent, due in March 2006, according to court documents.

In March 2008, the two sides had reached a settlement agreement, but the lawsuit said that Anderson, identified in the original complaint as John Doe, and his wife, Joan, had “failed and refused to pay the principal and all the accumulated interest” to Unity House.

In November 2008, the two sides reached a settlement compromise in which Anderson would turn over six condominium units on the 25th floor of the Ilikai by March 31 in lieu of paying back the loan. If the condos were not conveyed by that date, then Unity House would seek a judgement against the Andersons for $4.5 million plus 10 percent interest, according to court documents.

But the Ilikai itself was in foreclosure, and in May, New York lender iStar Financial took back the 203 residential units and the 16 commercial units after bidding $51 million at a confirmation hearing for the foreclosure auction. Anderson also lost the Kauai Beach Resort to iStar Financial through foreclosure a couple of weeks later.

Unity House did not receive title to the Ilikai units, and in June, the Andersons were named in the lawsuit, replacing the unnamed John Does.

Last week, the Andersons were named in an unrelated lawsuit filed by Pacific Rim Bank alleging they, one of their sons and a company called Lanihau Properties LLC owe nearly $1.6 million in principal, interest and fees from a $2 million line of credit opened on Aug. 25, 2006.

Anderson said Tuesday he had not seen the lawsuit and could not comment on it. He did not immediately return a call Wednesday seeking comment on the Unity House bid and lawsuit.

Anderson’s company, Anekona W, filed for Chapter 11 bankruptcy in June in an effort to prevent the Waikiki hotel from being sold at a foreclosure auction that same month. In July, he retained a broker to market the property for $14 million, but the Chapter 11 case was dismissed a week and a half later after the U.S. Trustee argued that the two mortgages on the property would leave little for other creditors.

Earlier this month, Anderson hired a new bankruptcy attorney and, less than two hours before the auction’s scheduled time on Tuesday, attempted to have the Chapter 11 case reinstated and the auction halted, claiming there was a buyer interested in purchasing the notes from the two banks

After a brief deliberation, U.S. Bankruptcy Judge Robert Faris declined to grant Anderson’s motions, saying that the time between the foreclosure auction and the confirmation hearing would give an interested buyer plenty of time to step in and purchase the hotel.

Unity House, which was founded in 1951 by Arthur Rutledge, has approximately 10,000 beneficiaries, mostly members and retirees of the UNITE H.E.R.E. Local 5 hotel and restaurant workers union and the Hawaii Teamsters, Local 996.

The Lotus at Diamond Head, which is managed by Castle Resorts & Hotels, is a non-union operation.

Boersema said the hotel likely would continue to be managed by Castle, but it’s unclear whether the hotel’s employees would become organized under Local 5 if Unity House prevails at the confirmation hearing.

“We have to actually obtain title to it and then look at all the various options for that property,” he said.

Source: PBN

bankruptcy

General Growth Properties hammered by rising vacancies

General Growth Properties posted a 2.1 percent drop in earnings, dragged down by the retail slump, rising vacancies and costs tied to its Chapter 11 reorganization efforts.

In its second-quarter earnings release, the Chicago-based real estate investment trust (Pink Sheets: GGWPQ) posted operating income of $615.8 million, down from $629.1 million last year.

Its funds from operations fell 74 percent to $58.1 million, or 18 cents per share, down from $221.6 million, or 69 cents per share. Funds from operations, which show how much money investment trusts generate from their properties, is the standard performance measure for real estate investment trusts.

The debt-laden mall owner attributed much of that decline to the sagging retail industry and its reorganization efforts. The company posted a $13.3 million drop in net operating income due to rising vacancy rates, $33.7 million in reorganization costs, and $27.9 million in additional restructuring costs including general and administrative expenses.

General Growth filed for Chapter 11 bankruptcy protection April 16. The company owns or manages about 200 malls in 44 states, some master-planned community developments and commercial office buildings. In addition to owning and managing the Ala Moana Center and the Ward Centers in Honolulu, General Growth also manages Windward Mall and Kapolei Commons on Oahu; King’s Shops at Waikoloa Beach Resort and Queens’ Marketplace on the Big Island; and Whaler’s Village and Queen Kaahumanu Center on Maui.

Source: PBN

bankruptcy

Lehman loan jams up Big Island project

A $105 million loan by Lehman Brothers to pay for development of 5,700 acres of former sugar plantation land on the Big Island is the latest financial deal ensnarled by the Lehman bankruptcy.

With the job unfinished and Lehman’s assets in limbo, the developers have asked a New York bankruptcy court to make a decision on assuming or rejecting the loan.

The borrowers are led by Massachusetts resort developer Alan Worden. If the loan is rejected, Worden wants to be able to seek alternate funding, according to a motion filed Friday in the U.S. Bankruptcy Court in New York. The court has set an April 7 hearing on the matter.

Worden’s group purchased the land in the Big Island’s Kau district in 2006 and had projected it would take three to five years to build out the infrastructure and secure approvals and permits to build a high-end residential development consisting of large homes on “farm” lots. They planned to subdivide and sell the land, which would have an average density of one home per 20 acres.

Lehman Brothers stopped funding the loan after it filed for Chapter 11 bankruptcy protection on Sept. 15, 2008, disrupting the project. Up to that point, the developers had borrowed $43 million of the $105 million, according to the motion.

The motion said that Lehman Brothers, in discussion with the Hawaii borrowers, had indicated that it would reject the loan, but has not done so. That inaction has adversely affected dozens of contractors and other employees who cannot be paid without the Lehman funding, the document said. The project owes at least $335,000 to local workers, according to a declaration filed by Worden.

“Those contractors’ work is essential to obtaining permits for the acquired land necessary to realize its full value,” the motion said. “Lehman’s failure to fund the project’s operating costs has thus severely disrupted the project’s ability to obtain necessary permits and has been so devastating that the Hawaii borrowers’ damages may exceed the amount borrowed.”

Worden is the managing member of Windwalker Hawaii, which is the managing member of WWK Hawaii Holdings, which owns all the interests in the borrowers, WWK Hawaii-Waikapuna, LLC, WWK Hawaii-Moaula, LLC, WWK Hawaii-Honuapo, LLC, WWK Hawaii-Little Honuapo, LLC, WWK Hawaii-House Parcel, LLC, WWK Hawaii-House Parcel 2, LLC, and WWK Hawaii-Naalehu Parcel 1, LLC.

Worden is also founder and CEO of Scout Real Estate Capital, which is based in New York City and Nantucket, Mass., and president of Windwalker Real Estate in Nantucket.

Source: PBN

bankruptcy

General Growth Properties struggling to avoid bankruptcy

General Growth Properties Inc. said its Rouse Co. LP subsidiary has extended a deadline that could allow it to skip payments on more than $2 billion of debt.

General Growth Properties (NYSE: GGP) is the second-largest U.S. shopping mall owner. The Chicago-based company, which owns or operates more than 200 U.S. malls, is struggling with $1.18 billion of past-due debt.

In Hawaii, General Growth manages Ala Moana Center and Ward Centers.

The Rouse Co. has extended the expiration date for its previously announced consent solicitation to 5 p.m. on March 27.

General Growth lost a Louisiana shopping mall to foreclosure by Citigroup Inc. (NYSE: C) and two other investors on March 20.

The Wall Street Journal reports General Growth missed a payment on $395 million in bonds last week. The report says General Growth is planning to stop paying interest and principal on existing bonds and asking holders to accept a fee in return for not demanding payment this year.

Source: PBN

bankruptcy

General Growth reports $1.2B in overdue debt

General Growth Properties Inc., the owner of major retail destinations in Hawaii and the nation, had a grim showing last year.

The Chicago-based owner and manager of more than 200 malls and other developments reported about $1.18 billion in past-due debt and about $4.09 billion of debt that could be accelerated. Its lenders, however, haven’t taken action yet on that debt.

General Growth owns Ala Moana Center and Ward Centers in Honolulu.

General Growth (NYSE: GGP) also has $1.44 billion of consolidated mortgage debt and about $595 million of unsecured bonds that will mature this year that it needs to repay, refinance or extend. But “the refinancing market remains at a standstill,” the company noted in a news release.

General Growth said it is “considering all strategic alternatives” and is still talking with its lenders.

“In the event that we are unable to extend or refinance our near and intermediate term loan maturities, we may be required to seek legal protection from our creditors,” General Growth said.

The company is trying to cut costs. It has “suspended our cash dividend, halted or slowed nearly all of our development and redevelopment projects, systematically engaged in certain cost reduction or efficiency programs, reduced our workforce by over 20 percent and sold certain non-mall assets,” the release said.

As for results from retail operations, General Growth reported:

* Comparable tenant sales decreased 3.8 percent in 2008 compared to the previous year.
* Sales per square foot decreased 4.2 percent compared to 2007.
* Occupancy decreased to 92.5 percent as of Dec. 31, 2008, compared to 93.8 percent a year earlier.

General Growth’s funds from operations were $222.2 million in the fourth quarter of 2008, compared to $190.4 million in the same period a year earlier, an increase of approximately $31.8 million.

The results don’t look as good excluding funds from real estate, income from the master planned communities and benefit from income taxes. With those excluded, General Growth posted $231 million for the quarter, down from $271.2 million. Cost reductions in marketing, supplies, personnel and the like did not offset its decline in revenue, the company said.

Source: PBN

bankruptcy

General Growth gets another loan extension

General Growth Properties, a Chicago-based real estate trust that owns Ala Moana Center and Ward Centers, has received an extension on some of its debt through March 15.

The company (NYSE: GGP) made the debt agreements with its lender syndicates for both the 2006 senior credit agreement and its secured portfolio facility, whose forbearance agreements expired Monday.

It agreed to certain additional restrictions and covenants, which the company did not identify, while the lenders agreed that other company defaults would not cause a termination of the new forbearance agreements before their expiration.

In mid-November, General Growth warned that it might seek bankruptcy protection if it couldn’t restructure of refinance its heavy debt load.

On Dec. 10, Fitch Ratings downgraded the company and warned that a default on nearly $900 million in debt was likely. Two days later, General Growth said it had borrowed $896 million, which it used to retire a $58 million bond issued by the Rouse Co., as well as refinance $814 million of mortgage indebtedness that was originally scheduled to mature in 2009. The new mortgages mature in 2013 and 2015.

The new agreements give General Growth a bit of breathing room to reschedule or refinance its heavy debt load. The company owns or manages about 200 malls in 44 states.

Source: PBN