GGP Ggp Inc. (delisted)

General Growth Properties Inc. (GGP), a real estate investment trust (REIT) that owns shopping malls in the U.S., has recently refinanced $1.7 billion worth of mortgage loans collateralized by 7 shopping malls. At the same time, the company also increased the borrowing capacity under its credit facility from $720 million to $750 million. The strategic moves were aimed at increasing its liquidity, which presently has swelled to over $2 billion.

With the refinancing transactions, General Growth has lowered its interest burden on the new mortgage loans, which bears a weighted average interest rate of 5.33% compared to 5.65% in the erstwhile loans. In addition, the new loans have a weighted average term of 10.3 years – approximately 7 years over that of the in-place financing.

Besides reducing interest and lengthening the debt maturity period, the new mortgage loans also generated cash proceeds of approximately $400 million in excess of the in-place financing.

Earlier in April 2009, General Growth had voluntarily sought relief under Chapter 11 of the U.S. Bankruptcy Code to reduce and restructure its debts. During the bankruptcy proceedings, the company continued all its day-to-day operations in all the shopping centers and other properties, while exploring strategic alternatives for available sources of capital to emerge from bankruptcy as quickly as possible.

General Growth emerged from bankruptcy in November 2010. The company currently owns and manages a portfolio of 169 regional and super regional shopping malls in 43 states. The aggregate portfolio amounts to 174 million square feet of retail space.

The rating on General Growth is currently ‘Neutral’. The stock presently has a Zacks #3 Rank, which translates into a short-term ‘Hold’ recommendation and indicates that the stock is expected to perform in line with the overall U.S. equity market for the next 1–3 months. We also have a ‘Neutral’ recommendation and a Zacks #3 Rank for Macerich Co. (MAC), a competitor of General Growth.

 
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