General Growth Properties, one of the largest mall operators in the nation, filed for bankruptcy early Thursday morning in one of the biggest commercial real estate collapses in United States history. “Our operational model is sound,” Thomas H. Nolan Jr., the company’s president and chief operating officer, said on a conference call early Thursday morning, citing “the unprecedented disruption in the real estate financing markets and the need to extend maturing debt” as the reason the company filed.Despite bargaining for months with its creditors, General Growth faced dwindling options for handling its more than $25 billion in debt, largely in the form of short-term mortgages that will come due by next year. The company has been severely wounded by the recession, which has wreaked havoc upon the retailers who inhabit its more than 200 malls in 44 states. Many stores have shuttered, depriving mall operators like General Growth of revenue.
As the second-biggest operator of malls in the nation, behind only the Simon Property Group, General Growth’s troubles have been closely watched by the real estate and retail industry for months. Founded in 1954 and expanded through a series of acquisitions — topped by a $12.6 billion deal for the Rouse Company in 2004 — the company has a huge retail presence that has served as a barometer for the troubles bedeviling the American retail market.
