Capital market skeptic

General Growth Properties and the Commercial Real Estate Time Bomb

Well the pushed back(twice?) deadline for Rouse bond holders to sign a forbearance was 5pm Friday. Wires have been radio silent but based on the percentage signed up earlier in the week its hard to believe a further 25% of bondholders signed on before 5pm Friday. So either that deadline will be pushed back again or I think the Company has to file this week...

Is Amerco's Bankruptcy a Blueprint for General Growth Properties?

Answer me this then: If there is so much equity value to be unlocked through a restructuring that would 1st entail GGP debt holders being made whole. How can you reconcile that to the current trading levels on GGP/Rouse bonds (all trading at a price under 30 cents on the dollar for yields of 30% + in some cases). The secured loans are trading even lower at maybe 20 cents on the dollar. Perhaps there is residual equity value but if the Company files in near term there is going to be a mad grab by mortgage holders for whatever collateral they can get their hands on which will then be sold at fire sale prices (something tells me Citigroup & Goldman are not about to hold GGP malls for 3 or 4 years to wait for better offers to emerge). Granted if GGP manages to negotiate with bond holders to give themselves 6-months breathing room I could see the equity as a viable call option but while the very real short-term risk is a free fall bankruptcy all I can say is watch out below...