X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

CHICAGO-General Growth Properties Inc., now under fire for having troubles with debt, has replaced its CEO and president with two new hires. CEO John Bucksbaum will continue to serve as chairman and president Robert Michaels will move to COO, but Adam Metz will serve as interim CEO and Thomas Nolan Jr. has been named interim president. The company also announced in a statement that it is putting its portfolio of Las Vegas retail properties up for sale, in an effort to raise cash.

While not tied to the moves directly by the company, officials said in the statement that an “affiliate of a Bucksbaum family trust” advanced unsecured loans to Michaels and former director and CFO Bernard Freibaum, who was let go by the company earlier this month. The loans were for the purpose of repaying personal margin debt relating to company stock. “The loan to Michaels, which totaled $10 million, has been repaid in full,” according to a company spokesman. “The loan to Freibaum, whose employment was terminated prior to the Board’s knowledge of these loans, totaled $90 million, and has $80 million presently outstanding.” The spokesman refused further comment.

Company officials said in the statement that no laws or SEC rules were broken by the loans and no company assets or resources were involved. The loans did violate company policy, the officials said.

Metz, 47, is a founding partner of Polaris Capital LLC. Nolan was a managing director of Trefethen & Co., and has experience with troubled debt restructuring as a former employee of AEW Capital Management LP. Analysts have said that the “interim” titles suggest GGP is still shopping for a buyer of the company, but are skeptical that another company would want to take on so much debt. “We continue to believe that the M&A option is an unlikely rescue for GGP investors, given the potential suitors unlikely willingness to incur nearly $30 billion of debt, much of which matures in the next few years,” said Paul Morgan with FBR Capital Markets.

The Las Vegas properties for sale include Fashion Show Mall, Grand Canal Shoppes and the Palazzo. The company bought the 407,000-sf Grand Canal from Las Vegas Sands in 2004 for $776 million, and the 450,000-sf retail piece of the Palazzo, which was built for $580 million. Morgan said in a statement that GGP must be having trouble meeting the Nov. 28 maturity deadline for Fashion Show and Palazzo. “We are disappointed that this sale alternative is just now being considered, given that these debt maturities have been looming ominously on the horizon for months,” he said. Mall REITs Simon Property Group and Taubman, both which have property in Las Vegas, will likely be interested in the GGP properties, Morgan said.

General Growth will hold its earnings call at 9 a.m. EST on Oct. 31. “We recognize that we are facing unprecedented challenges in this economic environment, and we are committed to working with all our stakeholders to achieve a successful outcome to our strategic review process,” Metz said in a statement.

Bucksbaum talked to GlobeSt.com in an interview for today’s edition. The company’s stock was up 16 cents for the day just past noon, at $2.33, though the price has dropped significantly since the first of the year’s per share cost of $40.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 3 free articles* across the ALM subscription network every 30 days
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.