Mall operator files for bankruptcy


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The local malls under GGP's ownership are Stonestown Galleria in San Francisco, Newpark Mall in Newark, Southland Mall in Hayward and Eastridge Mall in San Jose.

Pick any mall in America and in the last year that retail experience has changed. There were fewer shoppers and more vacant stores.

"People just come when they really need it, not like before when they would shop, shop, shop," retail clerk Nadia Yasin said.

That dramatic pull back is bad enough but general growth properties has a bigger problem: billions in loans that need to be paid in full.

"It's not an issue of our business model, it's really an issue of the credit markets, the credit crisis and the inability to refinance mortgages as they come due," GGP President Tom Nolan said.

GGP says it is profitable and has nearly $30 billion in assets, but it has $27 billion in debt.

Santa Clara University economics professor Alexander Nolan is not surprised by the company's decision to try to restructure its debt under chapter 11.

"I think the company was expecting to they'd be able to rollover the short term debt and under the current circumstances that's just not possible," Nolan said.

The economic pressure has taken a toll on the company's value. In the last year the stock has plunged from a high of $44 in May, to 24 cents in November. The stock closed Wednesday at a $1.05 and was halted Thursday because of the bankruptcy filing.

The malls and individual store owners are reassuring customers that the bankruptcy process will not affect operations.

"So we're helping each other, business as usual open every day, same customer service to everyone," store operator Derek Wan said.

GGP says it is confident it will emerge from bankruptcy protection a stronger company but many analysts see this as a sign of things to come.

"I think what we are seeing is the problems in the residential crisis mortgage are spreading to commercial real estate as well," Nolan said.

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