BONNEVILLE RESEARCH - Working with clients to make things happen!
Yes, I am running for Utah Governor
Yes, Bonneville Research is very much still in
business, and helping clients make a difference
- a massive and multi-year
manufacturing expansion in West Valley City
supported by an EDA Project.
- a large data center development in West Jordan
supported by an EDA Project.
- working with Murray City to redevelop a corridor of
land along the light rail and commuter rail corridors
through the city.
- developing the economic development strategy as
part of the consulting team lead by EDAW to prepare a
special area plan for the largely undeveloped
Northwest Quadrant of Salt Lake City.
- an industrial/commercial center on land that had
sat vacant for 25 years in West Valley City supported
by an EDA Project.
- a large mixed-use development in South Salt
Lake supported by an Urban Renewal Project.
- rebudgeting a mixed-use development in Holladay
by an Urban Renewal Project.
- rebuilding of the Cottonwood Mall as a mixed-use
development in Holladay supported by an Urban
- a feasibility analysis of a
development in Taylorsville on a large publicly
owned parcel to be supported by an
Urban Renewal Project.
- a detailed market analysis of a recreational
development in southeastern Idaho.
- a feasibility analysis of Cottonwood Heights
establishing their own Police Department.
- an evaluation of the feasibility of merging two not-
for-profits providing services to needy youth.
- an analysis of a residential development in South
Salt Lake to be supported by an Community
- a market analysis of a proposed cycle oriented
condominium development in Moab.
- a facilities analysis for a successful children
charity in Salt Lake City.
- A market analysis of a proposed extended care
facility development in Salt Lake City.
Yes, we are very much still in business and
actively serving our clients and helping "make things
New York Times piece on the possible sale of
General Growth - owner of Cottonwood and Fashion
|Bonneville Research Website
Check out our Bonneville Research Website!
|General Growth, Mall Owner, May Be Facing a Sale
- It took only six weeks of negotiations for
General Growth Properties, the nation's second-
largest shopping mall owner and operator, to agree to
buy the Rouse Company in 2004 for $12.6 billion, a
breathtaking price at the time.
- Now that hasty decision, which drew immediate
fire from Wall Street analysts, has come back to haunt
General Growth and may lead to the sale of the 54-
year-old company, whose widely known properties
include Ala Moana Center in Honolulu, Water Tower
Place in Chicago and the Grand Canal Shoppes at the
Venetian in Las Vegas, The New York Times's Terry
- General Growth's acquisition of Rouse, which was
known for its innovative planned communities like
Columbia, Md., and its "festival marketplaces" like
Faneuil Hall in Boston and the South Street Seaport in
Manhattan, was financed almost entirely with short-
term mortgage debt. This financing strategy, with debt
equal to more than 70 percent of its capitalization,
raised fears that General Growth, a real estate
investment trust based in Chicago with more than 200
shopping centers, had become overleveraged -
fears that have now been borne out. The deal included
$5.4 billion of Rouse's debt.
- "They believed that credit markets would continue
to be friendly and they would have ample opportunities
to restructure their debt," Keven S. Lindemann, the
director of real estate for SNL Financial, a research
company in Charlottesville, Va., told The Times. "But
the capital markets turned against them."
- Earlier this month, the company dismissed its
longtime chief financial officer and suspended its
dividend. Moody's Investors Service, Fitch and
Standard & Poor's have reduced the company's credit
- John Bucksbaum, chief executive since 1999 of
the company founded by his father, Matthew, and an
uncle, Martin, who died in 1995, declined to be
interviewed, The Times said. But in a recent
statement, General Growth said it was exploring a
variety of options, including the sales of individual
properties and partnerships with other companies,
to "align the market value of the company's common
stock more closely with the intrinsic value" of its
- The company has also postponed $1.1 billion of
projects, according to Green Street Advisors, a
research company in Newport Beach, Calif., including
an open-air retail and office development with 1.5
million square feet in Summerlin, Nev., the vast
planned community near Las Vegas that it acquired in
the Rouse merger.
- Despite these efforts, Rich Moore, a retail REIT
analyst at RBC Capital Markets, predicted that another
large shopping mall operator, or a combination of rival
companies, would end up buying General
Growth. "The reality is, given this credit crunch, they're
up against the wall," Mr. Moore told The Times.
Possible suitors for all or parts of the company
include the Simon Property Group, the Westfield
Group and Vornado Realty Trust.
- Giving up the company would be a humiliating
blow for Mr. Bucksbaum, a cycling enthusiast whose
family ranked No. 205 on Forbes magazine's most
recent list of the 400 richest Americans. The company
traces its roots to a family grocery business in
Marshalltown, Iowa, which Mr. Bucksbaum's father
and uncle expanded into one of the Midwest's earliest
shopping centers, the Town and Country Center in
Cedar Rapids, in 1954. The company moved its
headquarters to Chicago in 1997.
- Like most REITs, General Growth grew by
acquiring other companies. Jim Sullivan, a senior
analyst at Green Street Advisors, said John
Bucksbaum's biggest mistake was giving Bernard
Freibaum, the chief financial officer for 15 years, an
unusual degree of autonomy. "He was the architect of
a financial strategy that did not provide for flexibility
when things got tough," Mr. Sullivan said.
- Analysts say that General Growth is considered a
strong mall operator whose woes are not a reflection
of its performance. In more ways than not, General
Growth resembles the industry leader, the Simon
Property Group. Like Simon, General Growth has a
mixture of highly successful shopping centers and
others that are less productive. "The overwhelming
share of their growth and income comes from their top
50 to 70 malls," said Paul Morgan, a REIT analyst at
Friedman, Billings, Ramsey & Company, referring to
both companies. But the ratio of Simon's debt to its
market capitalization is only 40 percent, he said.
- In a conference call with analysts on July 31, Mr.
Bucksbaum said that mall occupancy during the
second quarter was 93.2 percent, a record. The
company has remained largely unaffected by the wave
of recent retail bankruptcies, with store closings
amounting to fewer than 1 percent. And though sales
per square foot did not increase since last year, they
averaged a healthy $459 a square foot, with the
strongest 50 malls generating an average of $648 a
square foot, he said.
- But the company has $8.5 billion in debt coming
due before the end of 2010, most of it in the form of
maturing mortgage loans. Refinancing the debt is
considered highly unlikely because of the credit
squeeze and the decline in retail real estate values
stemming from the economic downturn.
- And General Growth has made other mistakes as
well. It already had a presence in Las Vegas with the
Meadows, Boulevard and Grand Canal malls when it
bought Rouse, the owner of the Fashion Show mall
as well as Summerlin. The $1 billion in debt coming
due this year includes loans on the Fashion Show
and the Shoppes at the Palazzo, the new mall that
General Growth recently acquired from the Las Vegas
Sands. "They put a lot of eggs in a basket that was
already pretty full," Mr. Sullivan told The Times.
- The Las Vegas area has been hit especially hard
by the housing crisis, and tourism is also feeling the
effects of the downturn. From August 2007 to August
2008, the number of visitors to the city declined by 4.3
percent and gambling revenue was down by 9.4
percent, the Las Vegas Convention and Visitors
- In an embarrassing legal defeat, General Growth
was ordered last November to pay $74.2 million in
compensatory damages to a private developer,
Caruso Affiliated Holdings, after a jury found that it had
tried to block the Cheesecake Factory restaurant chain
from opening in a new shopping center adjacent to its
own Glendale Galleria in California.
- Shares of General Growth, already battered by its
debt problems, recently plummeted further as
executives, including Mr. Freibaum, were forced to sell
millions of dollars worth of stock to satisfy margin
calls. (The Bucksbaum family did not sell any shares,
the company said.)
- General Growth's struggles have not stopped the
company from pursuing development opportunities. In
June, the company announced an ambitious
redevelopment plan for the South Street Seaport that
would include a 42-story apartment and hotel tower.
Last week, Mayor Michael R. Bloomberg of New York
designated General Growth as one of the developers
of a 1.7-million-square-foot development between
Second and Third Avenues and 125th and 127th
Streets in East Harlem.
- General Growth is hardly the only shopping center
company in trouble these days. The Centro Properties
Group, a strip center company based in Melbourne,
Australia, has faced similar short-term debt problems
since its acquisition last year of New Plan Excel Realty
Trust, a United States REIT. Feldman Mall Properties
of Great Neck, N.Y., which owns seven shopping
centers across the country, disclosed last month that
it might go out of business by the end of the year.
- But those companies were never in General
- "This is a blue-chip, incredibly well-respected
company with a founding family that helped build the
mall business in this country," Mr. Sullivan said.
Source: The New York Times 12/15/08
||New York Times - General Growth, Mall Owner, May Be Facing a Sale