Mag Mile mall owner having financial trouble

November 11, 2008 3:30:06 PM PST
The owners of Chicago's Water Tower Place are having financial problems. General Growth Properties is now being forced to refinance its growing pile of debt or sell some of its well known malls. The firm is the nation's second-largest owner of shopping malls and is based in Chicago. It also owns Northbrook Court and Oakbrook Center.

A spokesman for General Growth says they looking at their options. The firm is selling two of its Las Vegas malls on the strip and would entertain offers on any of its properties. It's an example of a shift in the retail industry in response to customers spending more responsibly.

American Girl Place brings new life to Water Tower Place, 835 N. Michigan. The new flagship store has more space than the old location and appears to be going against the trend of retailers in this economy. The store's general manager says they've exceeded sales expectations since its opening in October.

"People are assessing their budgets and determining if they have to give up something else, the kids are the last place they want to sacrifice," said Gar Crispell, American Girl Place.

While this new tenant of Water Tower Place is doing well, the owner of this mall and more than 200 others is in financial trouble.

General Growth Properties has its corporate offices on Wacker Drive. In recent financial filings, the company reports $4 billion in debt. A spokesman says the company is considering selling properties to balance the budget. Besides Water Tower, General Growth also owns two suburban properties, Northbrook Court and Oakbrook Center.

"This is a glaring illustrating of how deeply trouble the retail system is," said George Rosenbaum, Leo J. Shapiro and Associates.

George Rosenbaum is a consumer retail researcher with Leo J. Shapiro and Associates. Rosenbaum says fewer people are willing to drive far to shop at malls and there are simply more stores than there is cash in the pockets of consumers.

We've seen other examples of hard times for retailers. Monday, Circuit City filed for bankruptcy. Last month, Linens and Things filed for bankruptcy

"The growth of retail stores has been fueled in large part by consumers going into debt, both spending generously on their credit cards and buying with home equity loans," said Rosenbaum.

Consumers ABC7 spoke with are already being more cautious on spending and plan to do the same through the end of the year.

"It's looking grim because the economy," said Cecil Gamble.

"I think I'm still gonna buy gifts for everybody, but may not be as extravagant," said Susan Cohen.

"I may think twice about do I really need this, especially clothes, and I think I have plenty of good clothes," said Gabriel Carrasquillo.

A statement from General Growth reads in part: "We continue working with our advisors to develop a comprehensive, strategic plan to generate capital...regardless of our situation, our properties and company will continue to operate, remain vibrant and look forward to a prosperous holiday season."


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