General Growth mortgage deadline approaches

By Ilaina Jonas

NEW YORK, Nov 26 (Reuters) - As the clock ticks for mall owner General Growth Properties Inc GGP.N to meet a Friday deadline on $900 million of maturing mortgages, investors, analysts and real estate experts question whether a loan extension could save the company from bankruptcy.

"It's possible an extension postpones the inevitable," said Gary Eisenberg, a partner in Herrick, Feinstein's Financial Restructuring, Bankruptcy & Creditors' Rights practice. "But a lot can happen in 60 days, as we've all seen since the last 90 days have elapsed. What was considered inevitable 90 days ago may not be so inevitable today." The law firm is not representing General Growth.

General Growth declined to comment.

General Growth, the No. 2 mall owner in the United States, has been in talks with lenders to extend $900 million in secured mortgages on two Las Vegas shopping centers, Fashion Show mall and Shoppes at the Palazzo. It also has another $58 million due Dec. 1 on a corporate debt for Rouse, a mall company General Growth bought in 2004. In total, the company faces $1.035 billion in debt coming due before the end of the year.

Next year, the Chicago-based real estate investment trust, which has over 200 malls in 45 states, faces another $3.07 billion in debt maturing. All told, General Growth is staring at $21.9 billion of debt maturing by the end of 2012.

"We are looking at multiple options to address our current financial situation, among them continuing to work with our syndicate of lenders on loan extensions," General Growth said in a Nov. 10 filing with the U.S. Securities and Exchange Commission.

To raise cash, General Growth is looking to sell Fashion Show Mall and Shoppes at the Palazzo casino and another Las Vegas mall, Grand Canal Shoppes. The company would have to raise about $1.6 billion to pay off the upcoming maturities through April.

It has put other properties on the market, including two office assets in Portland, Oregon, and Seattle, Washington, and Victoria Ward in Honolulu, RBC Capital analyst Rich Moore said after meeting with General Growth executives last week at the National Association of Real Estate Trusts annual convention.

General Growth's debt is a complex web of mortgage debt, securitized mortgage debt, credit facilities, and roughly $5 billion of unsecured Rouse corporate debt. A default of one can trigger a default of another.

Rouse's 5.375 percent notes due in 2013 fell to about 23 cents on the dollar on Wednesday, yielding about 46 percent, versus about 33 cents on early November, according to MarketAxess data.

Failure to refinance or extend the $900 million by Friday would trigger an event of default under the company's senior credit facility and secured portfolio facility, General Growth said in the SEC filing.

It also said it could be required to seek Chapter 11 bankruptcy protection and that an inability to address its debt maturities this year and next "raises substantial doubts as to our ability to continue as a going concern."

General Growth has hired law firm Sidley Austin as its bankruptcy counsel.

Standard & Poor's Rating Services identified 101 U.S. commercial mortgage-backed security (CMBS) loans amounting to about $12.4 billion in which General Growth has at least some ownership interest. These loans serve as collateral in 88 Standard & Poor's rated pools that were later sliced into bond tranches.

Many of those mortgages carry a balloon payment at the end of their term, often five years.