Contractors who built Towson Town's new luxury wing (including Louis Vuitton, Burberry's and Lacoste stores) are still owed hundreds of thousands of dollars. The cases seem more like disputes among contractors than anything to do with General Growth's cash crunch. But it sounds as if General Growth is just as eager as the construction companies to wind up the cases so it can have a clear Towson Town title to flash at potential buyers.
The quicker General Growth can sell anything, the better. Like so many others, it bought more real estate than it could afford.
It paid $7.2 billion for Rouse in 2004, took on another $5.4 billion in debt in that deal and owes a total of $27 billion. It faces a balloon payment of nearly $1 billion, due Nov. 28, which it doesn't have the cash to pay and which it will have extreme difficulty refinancing in this credit market.
An attempt to sell up to $2 billion in preferred stock flopped.
Hence the need to sell malls, quick.
The earliest repercussions are likely to be delays in any possible real estate upgrades, including a huge retail, condo and office makeover planned for downtown Columbia.
Baltimore County officials hope new ownership would lead to investment in the languishing Owings Mills Mall.
While General Growth does a good job with the White Marsh and Towson malls, County Executive James T. Smith has "complained vociferously" to the company about the lack of tenants at Owings Mills, said David Iannucci, county economic development director.
"I don't think you would find a lot of tears being shed if you got somebody new in here," Iannucci said.
But even a new landlord won't be flush with cash to upgrade.
The credit crunch has spread from banks to commercial real estate. General Growth's recent improvements to Mondawmin and Towson Town came just in time for a slump.
Consumer confidence hit an all-time low last month. General Growth's retail tenants aren't expecting the greatest holiday season. Boscov's, which helped anchor White Marsh and Owings Mills, is closing those department stores in bankruptcy proceedings.
Families across the country have postponed home expansions and renovations because of the economic slowdown. Others have been forced to sell houses at increasingly lower prices because they can't pay their mortgages.
Now mall owners are following them over the cliff.
