General Growth Properties,
Buyout or Bankrupt due to
Financial Problems
General Growth Properties buyout? – is it really going to happen? Here’s what you need to know to profit…
The stock holders of General Growth Properties (GGP) are hoping for a buyout to solve the company’s financial problems. Due to the current economic conditions, especially in the retail sector, GGP’s stock price has hit and all time low. The shareholders are hoping for any type of resolve, especially a buyout.
GGP’s financial problems started when they were unable to make payments on mortgage loan deadlines. Every time a loan payment came due, they have negotiated to extend the deadline. The company has announced its warning of bankruptcy to the public in late October.
General Growth Properties Buyout Tough For Assets
General Growth Properties is the 2nd largest REIT owner in the United States, having more than 30 billion in assets (at least, that’s what’s on their books). Some shareholders think their book asset values are low, as they are the appraised property values of 3 to 5 years ago. If this is true, a bankruptcy would be preferred over a buyout because there would be plenty of equity to be distributed after all the property was sold and the liabilities paid off.
On the other hand, some people are hoping for a buyout, but not necessarily of their entire portfolio. GGP would love to rid themselves of some of their malls as this would ensure their long term prosperity. Their problem is with liquidity, since they are unable to refinance their mortgages. One way or another, General Growth Properties will solve their financials problems, here this:
- They get bought out. The going rate will be at LEAST $3-4 bucks/share. Going rate as of today of less than a buck. Strong buy
- They refinance and thrive. If the credit markets continue unfreezing (which we think they will), they may be able to re-fi their debt, and continue doing what they do–building nice shopping malls at the nicest locations across America.
- They go bankrupt. When companies go bankrupt, their creditors (i.e. people that lend money to them) get first dibs on the company’s $. Whatever’s left-over, the equity holders split up. If you do the math, GGP’s stockholders will receive over $7/share AFTER the creditors get their cut.
That’s about 1,000,000% increase over today’s price
Go from General Growth Properties Buyout back to Stock Case Studies