Lenders lengthened General Growth Properties Inc.’s financial lifeline to March 15, giving the real estate giant six more weeks to cope with debt assumed while it built a portfolio of more than 200 malls.
Investors pushed General Growth stock up 30.8 percent to 85 cents Monday, but the issue is still a fraction of its 52-week high of $44.23. The company said lenders agreed to extend the forbearance periods on its 2006 senior credit agreement and its secured portfolio facility, which were set to expire last Friday.
The deadline for the 2006 credit agreement was established in a previous round of negotiations with banks in December and the company’s financing remains tenuous with about $3.3 billion in debt coming due this year. General Growth accepted additional restrictions and covenants to extend the deadline to March.
General Growth said, “Lenders agreed that certain possible future cross-defaults related to the company’s mortgage indebtedness will not cause an immediate termination of the forbearance agreements.”
“That’s a powerful statement,” Tim Goebel, director of investor relations at the firm, told WWD. “Otherwise you’d be worried.”
General Growth is getting used to negotiating with its banks. “We’re getting into something of a cycle of being able to work together more,” Goebel said.
A separate forbearance agreement for $900 million in mortgage debt related to the Fashion Show and Palazzo properties in Las Vegas expires on Feb. 12. The two properties were put up for sale in October.
“What we’re looking to do is continue to talk to them and work out some longer-term solution for these loans,” Goebel said, noting the company also has about $150 million in other mortgage debt coming due before the Fashion Show and Palazzo payments.
“We are not surprised,” said Lou Taylor, research analyst at Deutsche Bank. “The credit lenders are simply giving themselves time to assess the situation.”
Taylor said negotiations between the firm’s banks and bondholders would continue until March when $395 million in bonds come due.
“There are an infinite number of outcomes ranging from a repayment of bonds at a discount, to a default, to a bankruptcy filing,” he said. “Any outcome is possible at this point.”
Experts say the financial problems of mall owners and operators can lead to slower services and delays in renovations and other projects. The financial stress also could give retailers the upper hand when negotiating rents, though the balance sheets of developers can only handle so much pressure.
With major chains set to report January sales results on Thursday, retailers and their investors have bigger fish to fry at the moment.
Retail stocks were mixed on Monday, closing down 0.3 percent, or 72 points, to 259.16. They lagged the Dow Jones Industrial Average, which fell 0.8 percent, or 64.11 points, to 7,936.75.
Shares of Macy’s Inc., which consolidated its flagship chain into a single business unit, fell 4 percent to $8.59.
Among the other broadline retailers, Dillard’s Inc. stock rose 6.9 percent to $4.65 and Kohl’s Corp. increased 1.3 percent to $37.18. Decliners included Saks Inc., down 5.2 percent to $2.39, and Target Corp., off 3.2 percent to $30.20.
Shares of Christopher & Banks Corp. jumped 7.2 percent to $4.16. After the market closed, the company said it would consolidate the management of its namesake and C.J. Banks nameplates, reduce the district count to 58 from 89 and eliminate about 30 positions from its head count, as compared with July. The company expects to save about $2 million as a result of the reorganization and to take approximately $400,000 in fourth-quarter charges in the year just concluded as a result.
Specialty store decliners included Charming Shoppes Inc., down 8.3 percent to 99 cents; Destination Maternity Corp., 7.8 percent to $7.83, and Coach Inc., 4.3 percent to $13.97. Those gaining ground included The Talbots Inc., up 16.3 percent to $2.36, and Casual Male Retail Group Inc., 13.2 percent to 43 cents.
Even if January sales figures and fourth-quarter profits are poor, as expected, there is still the sense of more pain to come for retailers in the spring.
“Having been in clearance/liquidation mode now for almost two months, we think most of our companies are in good shape regarding winter inventory carryover,” said Brian Tunick, an equity analyst following specialty stores at J.P. Morgan. “The bad news is how much spring inventory is currently arriving at retailers’ distribution centers and will also need to be marked down.”
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast