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General Growth Properties' Piggy Bank is Low as Debt Piles Up


(CHICAGO, IL) -- Think your bank checking account is sick?  Take a look at the balance sheet General Growth Properties disclosed today.

The Chicago-based  owner and manager of 200 shopping centers totaling 200 million square feet in 44 states owes about $1.179 billion and had only $168,993 in cash in the till as it started the year in 2009.  

That is still better than December 2007 when it had only $99,534 on hand.

Lenders could demand payment on another $4.09 billion in unpaid loans.

The Ilinois REIT has  an additional $1.44 billion of consolidated mortgage debt and about $595 million of unsecured bonds scheduled to mature in the balance of 2009 that remains to be refinanced, repaid or extended.         

"However, our lenders have not yet exercised any of their remedy rights with respect to such debt," says General Growth chairman and CEO John Bucksbaum.

However, he cautions, "In the event that we are unable to extend or refinance our     near and intermediate term loan maturities, we may be required to seek legal protection from our creditors,"   

Which means, Chapter 11 protection under the U.S. Bankruptcy Law.  

The company isn't optimistic on winning payment extensions.

"The refinancing market remains at a standstill," according to General Growth's prepared statement today.  "We are considering all strategic alternatives and are continuing our discussions with our lenders."

Additionally, the company has suspended its cash dividend to shareholders, halted or slowed nearly all of our development and redevelopment projects, "systematically engaged" in certain cost reduction or efficiency programs, reduced its workforce by over 20% and sold certain non-mall assets.

Here are the highlights of General Growth Properties'  year-end 2008 report to shareholders and the Security and Exchange Commission:

Core Funds From Operations (Core FFO) per fully diluted share for the fourth quarter of 2008 were $0.72, Funds From Operations (FFO) per fully diluted share were $0.70 and Earnings per share - diluted (EPS) were zero.

For the full year 2008, Core FFO was $2.83, FFO was $2.72 and EPS was $0.10.

(Note: Core FFO is defined as Funds From Operations excluding the Real Estate Property Net Operating Income (NOI) from the Master Planned Communities segment and the (provision for) benefit from income taxes.)

Core FFO for the fourth quarter of 2008 was $231.0 million, or $0.72 per fully   diluted share, as compared to $271.2 million, or $0.92 per fully diluted share, for the fourth quarter of 2007.

"While the aggregate of minimum rents and tenant recoveries remained essentially flat for the quarter, overall declines in the general economy, and the retail market specifically , impacted our retail properties causing revenue reductions in overage rents and other income (for items including promotion, sponsorship, and parking income)," says Bucksbaum.

Net Operating Income declined 2.4% from the $718.9 million reported for the fourth quarter of 2007 to $701.8 million for the fourth quarter of 2008. This reduction in NOI is primarily due to decreased revenue primarily due to declines in overage rents and other income.

Comparable NOI from consolidated properties decreased 4.1% in the fourth quarter of 2008 versus the fourth quarter of 2007.

Revenues from consolidated properties declined approximately 3.2% for the fourth quarter of 2008, or approximately $27.5 million, to $840.5 million as compared to $868.0 million for the same period in 2007 primarily due to declines in overage rent and other income.

Revenues from unconsolidated properties at the Company's ownership share declined slightly for the fourth quarter 2008 as compared to the fourth quarter of 2007, to $162.2 million from $163.2 million.

Comparable tenant sales, on a trailing twelve month basis, decreased 3.8% compared to the same period last year.

Sales per square foot, on a trailing 12-month basis, decreased 4.2% compared to the same period last year.

Retail Center occupancy decreased to 92.5% at December 31, 2008 from 93.8% at December 31, 2007.

Land sale revenues for the fourth quarter of 2008 were $35.5 million for consolidated properties and $18.1 million for unconsolidated properties, compared to $31.5 million and $15.5 million, respectively, for the fourth quarter of 2007.

Increases in land sale revenues reflect bulk sales of lots in 2008 as overall demand for individual lots remained weak, "a condition that is expected to continue into 2009," says Bucksbaum.

NOI, before the provision for impairment, from the Master Planned Communities segment for the fourth quarter of 2008 was $5.7 million for consolidated properties and $7.9 million for unconsolidated properties, as compared to $7.7 million and $2.2 million, respectively, in the fourth quarter of 2007.

"Given the uncertainties concerning our ability to refinance maturing loans and   the impact of potential strategic alternatives, we will not provide Core FFO guidance for 2009 at this time," says the General Growth Properties chairman.  



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