Shares in General Growth Properties, a company that owns some of the most prestigious malls in Las Vegas, fell to their lowest value since 2002 on Monday after an announcement that management will consider "core and noncore asset sales" to boost the stock price.
General Growth, which owns Shoppes at Palazzo, Grand Canal Shoppes, Boulevard, Meadows and Fashion Show malls, and the Shoppes at Summerlin Centre, lost about 51 percent of its value in the six months ending Monday, when it closed down nearly 25 percent, or $5.34, at $16.08 per share.
"This stock is in big trouble," RBC Capital Markets analyst Rich Moore told the financial news service MarketWatch.
Declines in company stock from a 52-week high of $57.84 have forced executives to sell their own shares to meet margin calls and raised questions about its ability to make good on billions of dollars in short- and long-term debt.
In August the company was facing a reported $2.5 billion in debt maturities by the end of the year.
Timothy Goebel, investor relations spokesman for General Growth, said the company has met maturations for the third quarter and that "the bulk" of remaining obligations this year are related to Fashion Show and Shoppes at Palazzo.
Beyond 2008, General Growth, the second-largest real estate investment trust in the country, has about $19 billion in debt coming due by the end of 2011.
According to Bloomberg News, General Growth's debt-to-value ratio is higher than competitor Simon Property Group, the largest REIT in the country with a portfolio that includes the Forum Shops at Caesars.
Monday's stock decline followed a statement from General Growth that said the company wouldn't rule out asset sales, new joint-venture partnerships or virtually any other means of financing options.
As recently as late July, company executives had said they wouldn't sell assets at fire-sale prices.
The announcement followed a disclosure last week it had granted lenders greater concessions to secure a $1.75 billion loan.
"I think their announcement is an acknowledgement that the secure markets are more difficult to access," said Steven Marks, a Fitch Ratings analyst.
Marks said Fitch rates General Growth as a whole as well as $9.6 billion in bonds used in the 2004 purchase of the Rouse Co. at "BB."
The rating is below investment grade and means, "there is a possibility of credit risk developing, particularly as the result of adverse economic change over time."
General Growth Properties is based in Chicago. It owns about 200 malls in 45 states. Despite its problems, management says occupancy in its malls was a record-high 93.2 percent in the second quarter.
Contact reporter Benjamin Spillman at firstname.lastname@example.org or 702-477-3861.