Tuesday, March 31, 2009

GGP: still hanging on

It is hard to be objective when you know people who work at a company. Face it, you don't want friends getting fired. So I'll admit I am pleased with each passing day that I do not see a Chapter 11 filing on GGP. I also happen to think Adam Metz can turn this around.

According to today's Journal, even though the company failed to get the consents necessary to get a break on some bonds,

"a bankruptcy filing isn't imminent for the mall giant, according to people familiar with the matter, and General Growth's ability to remain out of bankruptcy shows the unusual dynamic between lenders and distressed companies in the recession-ravaged commercial-real-estate market."
As I said a few weeks ago, there's not much to be gained right now for the creditors by forcing an 11. If the creditors did not think this was mainly a liquidity issue, that GGP could survive and that they could stand to make more by riding it out than going to court, believe me, they'd be cutting their losses. Everyone is these days, or so it seems.

Does any of this mean there will not be a filing? No. There's a lot of debt and not a lot of credit out there -- yet. Ackman will want some return on his investment, and some lenders may decide enough is enough, even if the process is long and messy and expensive. But for now, that low-slung former Morton Salt Building is still housing some darn good retail pros. And call me sentimental, but I hope it stays that way.