The collapse of General Growth Properties Inc. won’t be as widely known as Bear or Lehman, but it certainly is a large event. Perhaps the flagship of pending commercial foreclosures. In Fact, their demise effects us locally in Fort Worth as the company owns and operates Hulen Mall.
I had always been under the assumption that Hulen Mall was operated by Simon Properties, apparently that is not the case but I would certainly keep an eye on this firm in the near future. GGP lists assets closing in on $30 billion, with debts around $27 billion. The logical question is whether their asset valuation is based on mark-to-market accounting. If that is the case, then almost certainly their assets are overvalued.
We should expect more of this, and brace for serious commercial defaults. The Fed is taking an interesting approach this time around though. They are acting a bit preemptively by offer investors longer term notes on their commercial vehicles.
April 22nd, 2009 at
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