Welcome to HickoryRecord.com. Skip directly to: our Keyword Search, Section Navigation, Content.

HickoryRecord.com - Hickory Daily Record

HomeNewsEntertainmentSportsLifestylesOpinionCommunityWeather Online Tools Jobs | Real Estate | Shopping | Classified

Mall owner faces financial woes

Illinois company exploring options, including sale of some assets, declaring bankruptcy

By the numbers

People the mall attracts annually - 8.5 million

Shopping malls General Growth Properties owns in the U.S. - More than 200

Age of Valley Hill Mall - 30

By John Dayberry | Hickory Daily Record

Published: November 14, 2008

HICKORY - The parent company of Valley Hills Mall is considering selling some of its assets and declaring bankruptcy.

A General Growth Properties spokesman said the company is exploring various options. The spokesman said that whatever happens, the mall will remain open.

The Illinois company that owns Valley Hills Mall on U.S. 70, SE, and three other malls in North Carolina reported this week that its debt coming due in December and through 2009 could force it to declare bankruptcy.

In a statement filed with the Securities and Exchange Commission, General Growth Properties disclosed that it has $958 million in debt scheduled to mature by Dec. 1 and another $3.07 billion in debt coming due in 2009.

"In the event that we are unable to extend or refinance our debt or obtain additional capital on a timely basis and on acceptable terms, we will be required to take further steps to acquire the funds necessary to satisfy our short-term cash needs, including seeking legal protection from our creditors," according to the filing.

The company also said that worsening economic conditions may hurt it.

"We expect this weakness to continue and worsen in 2009 as the economy enters a recessionary or near-recessionary period. Consumer spending recently declined for the first time in 17 years, the unemployment rate is expected to rise, consumer confidence has decreased dramatically and the stock market remains extremely volatile.

"Given these expected economic conditions, we believe there is a … risk that the sales of stores operating in our centers will decrease, negatively affecting their ability to make minimum rent payments and increasing the risk of tenant bankruptcies," according to the filing.

A recent Standard and Poor report said retail sales could fall 2 percent this holiday season, or at best remain flat. The National Retail Federation is more optimistic, forecasting a holiday sales increase of 2.2 percent this year. During the last decade, holiday sales have increased an average of 4.4 percent each year, according to the Standard and Poor report.

"We continue working with our advisers to develop a comprehensive, strategic plan to generate capital from a variety of sources including, but not limited to, core and non-core asset sales, joint ventures, a corporate level capital infusion and/or strategic business combinations," said Jim Graham, General Growth Properties' senior director of public affairs.

"Regardless of our corporate situation, Valley Hills Mall, our other properties and our company will continue to operate, stay vibrant and remain open."

General Growth stock closed Thursday at 35 cents a share, unchanged from its opening price. The company's stock peaked at more than $60 per share early in 2007. Its price has fallen 98.8 percent this year.

Valley Hills Mall attracts regular customers from six counties.

A major renovation that took place from 1999 to 2001 included 30,000 square feet of additional gross leasing area for new retail, leading to a new Dillard's; a 30,000-square-foot food court with more than 600 seats; and a 28-foot antique carousel.

Valley Hills has about 90 specialty stores and carts, 11 food court retailers, a sit-down restaurant and four department stores.