Boise mall owner in financial trouble

The company that owns the Boise Towne Square mall has warned investors that it may seek bankruptcy protection if it can't refinance or extend nearly $1 billion in debt due next month.

Making matters worse is an additional $3.07 billion in property and corporate debt slated to come due next year.

General Growth Properties, the nation's second largest owner of retail malls, is trying to sell properties to raise money and eliminate debt. It wasn't known Wednesday whether it might try to sell Boise Towne Square, a thriving mall that is nearly 100 percent occupied.

The mall will not close, and retailers probably won't be affected by the situation whether GGP remains in control, loses it or sells the mall to someone else.

"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, senior director of public affairs, in an e-mail to the Idaho Statesman. "Regardless of our situation, Boise Towne Square, our other properties and our company will continue to operate, stay vibrant and remain open. We are looking forward to a prosperous holiday season at Boise Towne Square and nationwide."

As shoppers, many clutching shopping bags, wandered through stores and filled food court seats Wednesday, one store owner said she wasn't worried about GGP's woes.

"This is something all retailers are used to," said Janet Thompson, owner of JuJu, an upscale handbag store with locations in the mall and on 8th Street in BoDo. "Property ownership changes happen all the time, and the only thing that usually happens is you send your rent check to a different place."

Thompson signed a one-year lease with the mall in March. Both stores are doing well, though they are "struggling like everyone else," she said.

GGP is a real estate investment trust based in Chicago.

"Given the continued weakness of the retail and credit markets, there can be no assurance that we can obtain such extensions or refinance our existing debt or obtain the additional capital necessary to satisfy our short-term cash needs on satisfactory terms," the company said in a filing with the Securities and Exchange Commission. " Our potential inability to address our 2008 and 2009 debt maturities in a satisfactory fashion raises substantial doubts as to our ability to continue as a going concern."

The company last month suspended its dividend and ousted top executives. But that hasn't calmed investors, who have sent the company's shares into a virtual free-fall since September.

Shares of GGP were trading at 33 cents in after-hours trading Wednesday, down from a 52-week high of $52.24.

"Even if they go into bankruptcy, the mall would be placed in control of a receiver whose job would be to see that normal operations continued," said Dennis Crane, director of property services at Collier's International, one of the largest managers of retail space in the Valley.

Shoppers who may be concerned about buying holiday gift cards from the mall can relax. Mall retailers are reimbursed by American Express, not Boise Towne Square, so retailers would honor the cards even if GGP declared bankruptcy, said Travis Hawkes, owner of Pro-Image and the Orange and Blue Shop.

Aside from the going-out-of-business sale under way at Mervyns, which declared bankruptcy in July, confidence at the mall appears to be strong.

GGP just completed remodeling the interior in October.

"They retiled over 1 million square feet," Hawkes said. "The Boise mall is one of the strongest performers and on very solid ground. It would be a crown jewel for any company that acquired it."

The mall also added space along with a new entrance and facade for Borders books and the Cheesecake Factory in 2007.

GGP's other properties include the Fashion Show Mall and The Palazzo in Las Vegas - which GGP is trying to sell -and Water Tower Place in Chicago.