General Growth files for bankruptcy protection

General Growth files for bankruptcy protection

news.yahoo.com

NEW YORK (Reuters) – General Growth Properties Inc, the second largest U.S. mall owner, filed for bankruptcy protection on Thursday in one of the biggest real estate failures in U.S. history.

Ending months of speculation, the Chicago-based mall owner, which listed total assets of $29.56 billion and total debts of $27.29 billion, sought Chapter 11 bankruptcy protection from creditors along with 158 of its more than 200 U.S. malls, while it seeks to restructure some of its debt.

(visit the link for the full news article)

This is a major problem that isn't really being discussed in the media . The commercial real estate market is going to bust within the next 6 month's , i drive around my local cities and see alot of vacant buildings that have for rent signs on them. In fact there is a local mall near my home with about 15 vacant spots in it , located in Bedford N.H. which is considered an uperclass town.

People may be starting to realise that 90% of the things they buy are useless decor that is not needed in these times.

news.yahoo.com
(visit the link for the full news article)

[edit on 19-4-2009 by Samblack]

Commercial property developers and other investors kept adding fuel to the fire that was the massive property bubble . Now that the bubble has burst and people have gotten burnt its time to reek the consequences . Besides the likes of commercial property developers always seem to find a way back into the game while many home owners go thou the experience of a mortgage sale .

I remember an interview with Gerald Celente and he was talking about this exact same scenario.
I'm not the biggest fan of his (he's a little too gloomy for my taste), but it appears he was spot on about the commercial real estate collpase. It is coming. This is an important issue that should be discussed in the MSM.
More retailers can't make their lease/rent payment - more people will lose their jobs - more commercial and personal bankruptcies. Not good.

reply to post by kommunist

Kommunist, it was just discussed on CNBC on friday. As for Celente, he would be right if it wasnt government intervention. And nobody can predict what is going to happen in the future.

As I see it we are in unchartered territory. We havent seen anything like this. If the bailouts work we will be fine, if they dont we wont. Even old Donald Trump says if the govenment didnt save the bank we would be in a serious depression right now.

All the commercial real estate is valued at just over 6 trillion dollars. Out of the 6 trillions only half of that is being financed. I believe the amount financed is around 3.4 trillion. They expect there to be up to a 10% default on commercial realestate loans which comes to 300 billion. That is quite a small number especially seeing the loans are spread out over 800 banks.

The governement wouldnt even bat an eye to help the banks absorb those loses. 300 billion today is chump change. They will be no real affect from the commercial loan defaults. Maybe some small banks going under but that is expected anyway.

The Real Estate Roundtable, a trade group, estimates that commercial real estate in the U.S. is worth $6.5 trillion and financed by about $3.1 trillion in debt....U.S. banking sector could suffer as much as $250 billion in commercial real-estate losses in this downturn.

The artilce goes on to say that this could cause up to 700 banks to fail. I see a lot of small regional banks failing due to overexposure in the commercial market. That is unless the government steps in. Which I am sure it will.
source

I heard a commercial real estate expert talking about this friday on cnbc after general growth declared bankruptcy. The worse is already passed.

[edit on 19-4-2009 by tide88]