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any credible comments which have been made seem to all point to an emergence during the first half of next year.
today's volatility
i believe a great part of today's volatility is a result of comments made by sam zell on bloomberg this morning. he opined the commercial real estate recovery would be slower than expected and that while he felt that commercial properties would be reaching greater occupancy that it would be at 30% lower rents. it is my feeling this would apply to a greater extent to stressed commercial properties, not the better properties such as are held by general growth.
nevertheless, when a sector gets bad-mouthed, all players in the sector seem to get painted with the same brush. while other reits are also lower, ggwpq gets an unproportional dump because of its bankruptcy status. as i have said in prior posts, this stock will be volatile throughout the bk process and its true value will become apparent once the plan of reorganizaton is filed.
nothing that has happened today changes the favorable rulings ggwpq has received in its various court proceedings and as can be seen with an analysis of the legal and specialty consultant invoices processed through the bk court, things are moving forward toward ggp's emergence from bk.
general growth was the first into bk and as a result its balance sheet will be much better than any of its rivals when in emerges. its debt will have been extended and it will be under no immediate pressure to sell properties at a discount in order to survive. any sales between now and emergence, or for that matter at any time soon after emergence, will be for the sake of convenience, not necessity.
while i hold all of the shares i plan on getting and will not be adding any more, for those who have been on the sidelines waiting for a pull back to buy, this might well be it. hold on for the ride because this is a good reminder of how bumpy things can get along the way.
be that as it may,
if the equity survives it will be as a result of the lawyers doing a lawlerly job of lawyering up. a year from now it will hopefully be worth whatever the lawyers made doing their job. as a general rule i agree with you but this may just be the exception to the rule in that the lawyers don't walk away with all of the spoils.
heavy lifting continues:
a reveiw of the most recent k&e legal bill submitted to the bk court discloses the following:
total bill was $1,481,965 for the month of august and of that amount, $1,008,404 was spent directly on the plan of reorganization.
this specifically included working on loan modificatons, reviews,and revisions for over 40 separate properties including a review and analysis of loan proposal modifications of insurance company lending.
preparation for and attendance at conferences for lenders regarding the status and timeline for lending proposals; board meetings regarding the plan of reorganization and lender proposals; conferences with working groups and senior management regarding project level restructuring issues; and conferences regarding talf strategies, appraisal status, and cmbs agreements.
in addition to the k&e bill, miller buckfire (hired to specifically work on the por issues) submitted its bill for significant work on its analysis regarding restructuring alternatives for serviced debt including restructuring precedents for cmbs, working with ggp mgmt on individual loan restructuring terms, assistance in preparation of term loan sheets, and review and analysis of financial projections.
a review of these bills, while not showing intimate details, nevertheless reveals just how much work in being done on the por by all parties involved.
i view this as a good sign and while it is frustrating not to be able to get all the nitty gritty, i also find it commendable with all of this going on that not a lot of information leaking is occuring.
things are moving along, the company seems to continue having the ear of the court, and all parties seem to have taken judge gropper's directive to begin working in earnest to heart. with the normal market volitility between now and emergence from bk, i do expect the pps to keep trending upward. any confirmed positive news regarding any specifics of the por could spike the price up.
3 wks old but still interesting
General Growth Jumps on Morgan Stanley Filing
29 September 2009 Simon Monger
General Growth Properties, Inc. (GGWPQ), one of the largest mall owners in the United States, saw its shares surge higher after Morgan Stanley now has a 5.1% stake in the REIT despite its ongoing bankruptcy proceedings, according to a regulatory filing with the SEC.
The move may support the belief that General Growth’s common stock may retain some value, according to some investors. These investors argue that the company’s performance and assets remain strong, and creditors could be persuaded or forced to extend their loan terms.
Once the extensions are achieved, General Growth will work with its advisors to determine an appropriate capital structure for the new company. Under the bankruptcy code, GGP’s unsecured creditors are entitled to receive no more than the face value of their claims plus interest.
The remainder of the value left over should inure to the benefit of General Growth’s shareholders. As a result, the company’s valuation, which will be determined during the bankruptcy process, plays an extremely important role for shareholders.
Champion of the common stock investors is Pershing Square’s Bill Ackman, who first ignited the rally in the common shares. In a letter to his clients, the activist investor insisted that shares of General Growth could be worth as much as $40 per share based on peer valuations.
The passive stake maintained by Morgan Stanley has inspired additional confidence for many investors, while recent victories in courts have also helped enhance the value proposition for investors. As a result, shares rose sharply over the past two days.
this stock is not being cancelled. when the plan of reorganization is filed and approved, a new stock will be issued and those holding the "q" stock will receive new shares. while there most probably will be dilution and the new stock for old won't be on a 1 for 1 basis, existing stockholders WILL get new shares. you have to realize that not all of ggp's holding were placed into bankruptcy. even IF all of the entities placed into bankruptcy were to be wiped out that would still leave value for existing shareholders as a result of the holding which were not part of the bk process. a mini explosion of this stock will occur when the por is announced which is also the reason i have decided not to trade any of my shares. i don't want to risk being out of this stock when the announcement is made. don't know when that will be but i'm now willing to roll the dice so will just sit pat with my shares, ride the ups and downs until the por is announced, and hopefully be fat and happy when all is said and done.
court docket for tomorrow (10/15)
the key employee retention and incentive plan looks to be approved. at the time the docket was published, there had been no objections filed, however the filing deadline was 5:00pm today. if no objections are received then the court will approve the plan.
WEIL, GOTSHAL & MANGES LLP
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 310-8000
Facsimile: (212) 310-8007
Marcia L. Goldstein
Gary T. Holtzer
Adam P. Strochak
Stephen A. Youngman (admitted pro hac vice)
Melanie Gray (admitted pro hac vice)
Sylvia A. Mayer (admitted pro hac vice)
KIRKLAND & ELLIS LLP
300 North LaSalle
Chicago, Illinois 60654
Telephone: (312) 861-2000
Facsimile: (312) 861-2200
James H.M. Sprayregen, P.C.
Anup Sathy, P.C. (admitted pro hac vice)
Attorneys for Debtors and
Debtors in Possession
Co-Attorneys for Certain Subsidiary
Debtors and Debtors in Possession
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
---------------------------------------------------------------x
:
In re : Chapter 11 Case No.
:
GENERAL GROWTH : 09-11977 (ALG)
PROPERTIES, INC., et al., :
: (Jointly Administered)
Debtors.1 :
---------------------------------------------------------------x
AGENDA OF MATTERS SCHEDULED FOR HEARING ON
OCTOBER 15, 2009 AT 10:00 A.M. (EASTERN TIME)
Location of Hearing: The Honorable Allan L. Gropper
United States Bankruptcy Judge,
One Bowling Green, Room 617
New York, New York 10004
RESOLVED/WITHDRAWN MATTERS
I. Impact’s Motion to Compel the Debtor to Assume or Reject Its Contracts with Impact, or,
in the Alternative, Lift the Bankruptcy Stay (Docket No. 971)
Response Deadline: October 8, 2009 at 4:00 p.m.
1 A list of the Debtors, along with the last four digits of each Debtor’s federal tax identification
number, is filed with the Court at Docket No. 593 and is also available for free online at
Response(s) Filed/Received:
1. Debtors’ (I) Response to Impact's Motion to Compel Debtors to Assume or
Reject Its Contracts with Impact; (II) Objection to Impact's Motion to Lift the
Bankruptcy Stay; and (III) In the Alternative, Motion for Authorization to
Reject Debtors Contracts with Impact (Docket No. 3063)
Related Document(s):
1. Notice of Motion (Docket No. 968)
2. Memorandum of Law in Support of Impact’s Motion to Compel the Debtor to
Assume or Reject Its Contracts with Impact, or, in the Alternative, Lift the
Bankruptcy Stay (Docket No. 972)
3. Notice of Adjournment of Hearing (Docket No. 1375)
Status: This matter is resolved. The motion will be withdrawn and the parties are
working on a stipulation that will be submitted to the Court after the
hearing.
UNCONTESTED MATTERS
I. Motion of the Comptroller of the State of New York as Trustee of the Common
Retirement Fund for Adequate Protection (Docket No. 1010)
Response Deadline: October 9, 2009 at 4:00 p.m.
Response(s) Filed/Received: None
Related Document(s): None
1. Notice of Adjournment of Hearing (Docket No. 1375)
2. Notice of Adjournment of Hearing (Docket No. 2910)
Status: This matter is uncontested and an Order will be presented to the Court at
the hearing.
II. Debtors’ Motion Pursuant to Sections 105(a), 363, and 503 of the Bankruptcy Code for
an Order Approving (I) Amendment and Continuation of the Debtors’ Modified Cash
Value Added Plan, and (II) Implementation of a Key Employee Incentive Plan (Docket
No. 3032)
Response Deadline: October 14, 2009 at 5:00 p.m.
Response(s) Filed/Received: None
Related Document(s): None
1. Debtors’ Ex Parte Motion Pursuant to Bankruptcy Rules 2002(a)(2) and 9006(c)
to Shorten the Notice Period with Respect to Debtors Motion Pursuant to Sections
105(a), 363, and 503 of the Bankruptcy Code for an Order Approving (i)
Amendment and Continuation of the Debtors Modified Cash Value Added Plan,
and (ii) Implementation of a Key Employee Incentive Plan (Docket No. 3033)
2. Order Pursuant to Bankruptcy Rules 2002(a)(2) and 9006(c) to Shorten the Notice
Period with Respect to Debtors’ Motion Pursuant to Sections 105(a), 363, and 503
of the Bankruptcy Code for an Order Approving (I) Amendment and Continuation
of the Debtors’ Modified Cash Value Added Plan, and (II) Implementation of a
Key Employee Incentive Plan (Docket No. 3034)
Status: This matter is uncontested to date, however, the objection deadline is 5:00
p.m. today. If no objections are received, an Order will be presented to the Court at
the hearing.
CONTESTED MATTERS
III. Weaver Steel Construction and Kirbeg Company’s Motion for Relief from the Automatic
Stay (Docket No. 1332)
Response Deadline: September 18, 2009 at 12:00 p.m.
Response(s) Filed/Received:
1. Debtors’ Opposition to the Motion of Weaver Steel Construction and Kirbeg
Company for Relief from the Automatic Stay (Docket No. 3076)
Related Document(s):
1. Notice of Adjournment of Hearing (Docket No. 2327)
Status: This matter is going forward.
details of employee incentive plan:
as i indicated in post #3052, ggp was working on an employee incentive plan. it was presented in court this week and the complete details are contained in the following link.
i found it interesting that one component of the incentive dealing with an emergence from bankruptcy bonus pool of $10 million dollars was to be earned if general growth emerged from bk prior to june 2010. i find this somewhat odd since ggp asked for an extension to file its plan of reorganization which expires in february 2010. it would seem that the $10 million emergence bonus would have been tied to emerging from bankruptcy prior to the february date. since it didn't, i am left to wonder if ggp is not planning to emerge until late next spring. the details of this provision i believe are found on page 15 of 33 on the attached link.
http://www.kccllc.net/documents/0911977/0911977091002000000000009.pdf
holding tight to 25k shares with no intention of selling.
Treasury Relaxes CMBS Restructuring Rules
as posted, ggp was researching how spe loans could be modified. the attached article seems to verify that this is not only possible but will be done:
Treasury Relaxes CMBS Restructuring Rules
In my previous post on the looming commercial real estate crisis, I promised to blog in more detail about Commercial Mortgage-Backed Securities (CMBS) loans. I had not planned to do so today, but the Treasury Department has made the subject timely.
CMBS loans are "permanent loans," meaning that they were designed for commercial, incoming-producing assets, normally with a 10 year term. They were not designed for undeveloped land or to fund construction costs. An originating lender would make a number of CMBS loans meeting certain criteria, bundle them into a portfolio, and then shares of that portfolio would be sold to investors in the CMBS market. The individual loans would then be taken off the originating lender's balance sheet and the lender would earn a fee for putting the deal together. CMBS loans were particularly attractive to borrowers because interest rates were normally lower than traditional permanent loans.
Because the individual loans were packaged into securities, strict deal requirements evolved. The central requirement was that the borrower in a CMBS loan must be a special purpose entity (SPE). An SPE's sole purpose is to own and operate the mortgaged asset. SPE's were routinely created for the purpose of entering into the loan so that the lender could loan to a "clean" entity with no prior liabilities. Typically formed as Delaware limited liability companies, SPE operating agreements contained form provisions requiring them to maintain a separate existence from other entities and business enterprises (including separate letterhead, a separate telephone number, etc.). The purpose of an SPE was to isolate the operations of the borrower from the borrower's parent and affiliates. Each loan was intended to stand alone. SPEs were also designed and intended to be "bankruptcy-remote," meaning that they contained provisions which limited the borrower's ability to declare bankruptcy without the lender's consent (through an independent director) and limited the ability of the SPE to be involuntarily brought into a bankruptcy declared by the SPE's parent or affiliates.
In a CMBS loan, the role of the lender can be thought of as bifurcated. The holders of the securities own the economic interest in the loan, but the authority of the lender pursuant to the loan documents is vested in the servicer, usually another large financial institution. The servicer is permitted to do little more than receive and process loan payments and approve routine matters like new leases. The major force limiting the servicer's authority are tax rules that create taxable events for the securities holders if the servicer oversteps the bounds of its authority. For example, a servicer had no authority to renegotiate the terms of a loan, agree to a forbearance, or negotiate term or interest rate unless the borrower is in default. It is this inflexibility that General Growth Properties cited in its bankruptcy filing.
Commercial real estate owners have been petitioning Treasury to relax those rules, panicked at the thought of finding new debt (and equity) to cover the $150 billion in CMBS loans that will come due between now and 2012. (Non-CMBS loans are being routinely extended for a year or so to give the market time to readjust.) Treasury has now responded, issuing guidance which allows servicers to modify interest rates and term, regardless of when the loan matures. The only criteria is that the servicer must believe that there is a "significant risk of default," which may be true even if the loan is not currently in default.
Treasury's new guidelines are outlined in an article in the Wall Street Journal today on page C6 entitled "New Rules Ease the Restructuring of CMBS Loans." Unfortunately, I cannot link to the WSJ.
I wouldn't try calling a CMBS servicer today -- I'll bet the phone lines are jammed.
Tanya Marsh
heavy lifting underway:
a little due diligence and document research has disclosed the following progress:
plan of reorganization confirmation is well underway;
the prudential life insurance company has submitted a proposal to modify its loans and that proposal is being reviewed and analyzed by ggp;
plans dealing with ggp employee inventives and retention are underway;
evaluation of potential expert witness to address interest rate loan issues is underway;
a chart of project-level loan modifications is being reviewed and revised;
mortgage loan documents are being reviewed and analyzed to deal with cash management requirements and their covenants; and,
sample secured loan agreements relating to various possible loan modification requirements are underway in addition to dealing with a memorandum regarding special loan servicer authority to make loan modifications and standards for servicing loans which would include consent issues.
it should be apparent from the above activity that much work is going on behind the scenes to bring resolution of ggp's bankruptcy to a conclusion and at the same time address other items to insure that ggp will emerge and be able to hit the decks running.
while the court has granted ggp an extension until february to file its plan of reorganization, i would think that ggp would like to get this done before the holiday season. although it probably doesn't make any real difference if it gets done this fall or waits until february, i think there would be a psychological advantage for all concerned to have ggp emerge late this fall and hit the all important holiday shopping season without the distraction of the bk hanging over things.
while i have to applaud the close-lipped nature surrounding progress of the bk to date, i believe that as these loan modifications come closer to being finalized there will be some type of leaking of information which may cause the share price to spike. if you are day trading this stock and happen to be out of it when that occurs, i wouldn't be surprised to see a $3-$5 pop which will make it hard for some to chase it and get back in. i also believe there will be a bigger pop when the plan of reorganization is announced.
all in all, this should be an interesting time between now and the end of the year. it's looking better that this is our goose which is laying a golden egg.
link to article ref: in dirtblog post"
http://www.reuters.com/article/ousiv/idUSTRE57H63L20090818?pageNumber=1&virtualBrandChannel=11611&utm_source=Publicaster&utm_medium=email&utm_campaign=Baltimore%27s%20Big%20Bear%20%7C%20HFF%20Sells%20%7C%20Duke,%20JLL
this article was from mid-august so you may have seen it. it not, interesting read and speculation.
from dirtblog lawyer. ggp to start heavy lifting.
Thursday, August 20, 2009
GGP about to start some heavy lifting -- what a workout!
David Stejkowski
The Dirt Lawyer's Blog
Sorry, I could not resist that head to my post. This article sums it up pretty well. Lenders want their money back from GGP, in full, and now. GGP wants a seven year extension and favorable rates.
The judge has been siding with GGP so far, from what I can tell, and the bankruptcy guru of gurus said it best when commenting on the judge's refusal to take some of the properties out of the BK:
"The judge encouraged all parties to commence negotiations as soon as practicable in light of the decision," said James Sprayregen, partner with Kirkland & Ellis LLP, General Growth's co-counsel."
Some think GGP's best outcome is an acquisition by Simon and/or Westfield, both of which companies I understand have dry powder. This has been done before, especially in combo, as you may recall when Urban Retail/Rodamco's assets were split up by a troika. Now you could have more antitrust problems with consolidation and all that.
Others want to see the company survive, meaning there may be some very heavy lifting and long nights ahead for bankers and GGP execs on the business side if they want to make this work. And as I have said before that spectre of substantive consolidation hanging over the lenders almost like a Sword of Damocles.
Posted by David Stejkowski
Copyright The Dirt Lawyer's Blog 2009. Used with permission.
Tags: bankruptcy, chicago, general, ggp, retail, simon, westfield
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spe issue to change future financing
September 22: SoberLook - The GGP Case Changed the Rules of Engagement for Securitization
Print Article
Email Article
Location: Tokyo
Author: Walter Kurtz
Date: Tuesday, September 22, 2009
A recent ruling in the case of the defaulted General Growth Properties (GGP) has sent shock waves through the securitization markets. The ruling placed into question the strength of what's called "bankruptcy remote" entities. These entities are set up to ring fence the assets that represent the collateral pool for structured debt. One key reason for this requirement is to protect the debt holders' collateral from being dragged into bankruptcy if the equity holder defaults.
For example, consider a hedge fund that wants to leverage some assets. It would create a Special Purpose Entity (SPE) to purchase assets (loans, bonds, etc.) The hedge fund then contributes equity to the SPE. The leverage would come from senior lenders who are comfortable with the pool of assets in the SPE as collateral, but want nothing to do with the hedge fund. Their concern obviously is that if the hedge fund blows up, the fund's creditors will go after the assets in the SPE, even if the SPE itself has not defaulted and has plenty of asset coverage.
Using Delaware law allowed structured finance gurus to ring fence the SPE. A bank structuring the deal would work with the equity holders (in this case the hedge fund) to appoint independent directors and a trustee. If the hedge fund defaults, the structured senior debt holders and the trustee would make sure nobody can touch the collateral (including cash) in the SPE.
The GGP case seems to have changed the rules of engagement with respect to Delaware SPEs. In this particular case, the SPEs in question were GGP's property holdings that used CMBS financing. First let's take a quick look at a typical CMBS structure with respect to the equity holders and the SPEs:
Usually each property is held in an SPE which gets a mortgage on the property from the CMBS pool. These SPEs have independent directors and have been viewed as "bankruptcy remote". The mortgage provider is the CMBS SPE (a separete entity), which holds a pool of such mortgages on multiple properties (usually geographically diversified). To finance these mortgages, it issues structured notes that are tranched based on seniority. Cash flows (mortgage payments) generally follow a "waterfall" prescribed by the CMBS indenture, with senior notes getting priority to these cash flows.
In many cases a credit worthy equity owner will provide some form of a limited non-recourse guarantee to the mortgage lender. That creates additional credit support to the CMBS structure, reducing the financing cost to the property owner. This credit support however was a negative when the judge was considering the issue of "bankruptcy remoteness". The ruling allowed the bankrupt GGP to go after the properties and cash held in these SPEs, exposing the weakness in the Delaware SPE structure. The paper below discusses the weaknesses of the Delaware SPEs, particularly as it relates to CMBS.
The key issue was that the independent directors of the SPEs as well as the management (which now were the direct creditors of GGP) were allowed to consider not just the interests of the creditors, but of the equity holders when deciding about the fate of the SPEs. GGP creditors wanted to drag the SPEs into bankruptcy and they got the directors to vote their way. Interestingly enough GGP fired existing SPE directors and appointed new ones (that would be more cooperative) shortly before they filed for Chapter 11. The explanation was that the new directors knew more about commercial real estate.
But how can you force an entity into bankruptcy if it is current on its debt and doesn’t have to refinance for up to three years, as was the case with these SPEs? GGP argued that these entities will be bankrupt anyway when they have to refinance their balloon mortgages. This argument is in fact valid because of the wall of commercial real estate debt maturing in a few years (see looming balloon risk).
In addition, the argument was that the current state of GGP (as the SPEs’ affiliate), should be considered. In order to preserve value, the SPEs need to file now, rather than wait until their debt matures. The judge accepted this argument and allowed to have the SPEs file for Chapter 11.
That of course was a shocker to the CMBS debt holders, because their collateral was now compromised. Some legal scholars have argued that GGP is an isolated case and new cases (which are definitely coming) will prove that Delaware law works for bankruptcy remote SPEs. But given the sad state of the securitization markets, nobody wants to take a chance, and structurers are quickly moving away from Delaware. The jurisdiction of choice is now the Cayman Islands, where directors (when they get back from the beach) will side with the debt holders. And hedge funds that want to obtain non-recourse leverage (to the extent it's available) even for their onshore funds, will be setting up Cayman SPEs.
nasdaq having computer problems. evidently can not update volume or real time information. however, various quote sites indicate current bid ask range is $4.63/$4.65 and that was as of 10:58. rumors of halted trading appear not to be correct.
new sec filing: monthly financials
http://www.sec.gov/Archives/edgar/data/895648/000095012309039904/c53381exv99w1.htm
unless/until some factual news comes out regarding loan extension specifics, i think this stock will just move sideways. once the plan of reorg comes out (feb 2010 deadline and i think it could come prior to year end) then this stock will move and i believe you will be happy you own it.
new sullivan post, interesting legal opinion
http://valueplays.blogspot.com/2009/08/some-interesting-legal-opinion-on.html
general growth sells residential unit
Aug 29, 2009 (The Baltimore Sun - McClatchy-Tribune Information Services via COMTEX) -- GGWPQ | Quote | Chart | News | PowerRating -- Rouse-Fairwood Development Limited Partnership, a subsidiary of General Growth Properties, has sold a 650-unit residential community in Prince George's Country for $15 million. The transaction with Greenvest LC in Virginia closed on June 30. General Growth, which is operating under bankruptcy protection, has been trying to sell off properties to raise cash. The developer, which owns most of the region's malls, has put The Gallery and Harborplace on the market along with other properties.
reuters article
William Ackman, head of hedge fund Pershing Square Capital Management and one of the company's largest shareholders, wants lenders to extend the company's secured and unsecured loans by seven years, allowing General Growth to strengthen its balance sheet and the capital markets to recover.
"With a seven-year extension, we believe the company would be able to repay existing creditors in full," Pershing said in its recent presentation.
Ackman declined to comment, citing his position on the board.
Ackman acquired his stake -- controlling about 24.9 percent of the shares -- while the company was teetering on the brink of bankruptcy.
After it repays its debt, General Growth, excluding its management company and master planned community business, will be worth about $9 to $22 per share, Pershing said. Stifel Nicolaus senior analyst David Fick put that at about $10 a share.
link to full article: http://www.reuters.com/article/ousiv/idUSTRE57H63L20090818
also from the yahoo board. now, let's put this to rest!
Related Quotes
Sym. Price Chg.
GGP Trade
News 0 0
GGWPQ Trade
News 2.8 0
Ackman's Pershing Square Still Owns General Growth Shares
Aug 18, 2009 09:02:40 (ET)
By Joseph Checkler
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Bill Ackman's Pershing Square hasn't sold any of its General Growth Properties Inc. (GGWPQ) shares despite a regulatory filing that suggests otherwise, according to a person familiar with Pershing Square.
Pershing Square still owns 7.5% of the shares outstanding of General Growth, which is in Chapter 11 bankruptcy proceedings. Ackman's firm also owns more of General Growth through total return swaps.
The reason General Growth shares don't show up on Pershing Square's end-of-second-quarter 13-F holdings report with the Securities and Exchange Commission is that they're no longer required to be reported on 13-Fs since they're now traded over the counter and not on the New York Stock Exchange. If Pershing Square makes any change to its General Growth holdings, it would be required to file within days a 13-D form. Those filings are made by investors who own more than 5% of a company and plan to influence management.
Ackman recently took a seat on the board of the real estate investment trust. Earlier this year, Pershing Square had in place a $375 million debtor-in-possession loan for General Growth, but some lenders objected to the terms. Eventually, another hedge-fund manager, Farallon Capital, was chosen to provide a $400 million DIP loan.
Certain money managers are required to file 13-F forms within 45 days of the end of a quarter. Most hedge-fund managers, like Ackman, wait until the last possible day to make this filing, which gives investors and others their freshest possible look at high-profile investors' equity holdings. For the second quarter of 2009, that date was last Friday.
-By Joseph Checkler, Dow Jones Newswires; 212-416-2152; joseph.checkler@dowjones.com
sullivan's take on court ruling:
http://valueplays.blogspot.com/2009/08/general-growth-properties-wins-key-spe.html
court link to complete ruling
following are two excerpts from the judge's ruling. he denied the motion to remove the spe's from the bankruptcy and basically he cracked the whip and told the parties to start negotiating in earnest to extend the loans. he also said that his ruling was not to be construed as permitting the cash flow of the spe's to be consolidated for the purpose of satisfying other debt obligations. this serves to preserve the underlying intent of the spe's while directing that while some individual properties were able to service their debt in the short term that the risk of "default" because of failure to be able to refinance at maturity was sufficient reason to keep these entities in bankruptcy and require that debt extensions be negotiated to prevent problems down the road.
FROM THE JUDGE'S RULING:
These Motions are a diversion from the parties’ real task, which is to get each of the Subject Debtors out of bankruptcy as soon as feasible. The Movants assert
talks with them should have begun earlier. It is time that negotiations commence in
earnest.
CONCLUSION
For the reasons set forth above, the motions to dismiss are denied. The Debtors are
directed to settle an order on five days’ notice
http://www.kccllc.net/documents/0911977/0911977090811000000000008.pdf
i believe the stock will do very well today and the long term implications from this ruling are very bullish for the stockholders.
general growth posts 2nd qtr results
http://finance.yahoo.com/news/General-Growth-Properties-Inc-bw-1816698692.html?x=0&.v=1
macerich reports its results
as we await ggwpq's quarterly's, macerich just posted its results. they were down which could be a window into ggwpq. haven't poured over them to see how they might relate directly to what might be expected of ggwpq but it certainly is a look into the commercial r/e sector.
http://www.sec.gov/Archives/edgar/data/912242/000104746909007154/a2193665zex-99_1.htm
General Growth keeps securities markets on edge
http://www.reuters.com/article/managementIssues/idUSN0319430520090803
ggp insider trading history
http://www.secform4.com/insider-trading/895648.htm
have never seen this site before but it sure provides a lot of detail on insider activity. of note is that there has been no insider trading since the bk filing. i understand there are restriction placed in insiders as to when and how they can trade but i am nevertheless surprised there has been no reported buying by any insiders. i thought there were open periods after financials were filed during which buying and selling was ok. certainly seems someone inside would be chomping at the bit to buy at the prices we have seen since the bk filing. anybody know if the act of bk places unusual restriction on insiders?
thanks for the call out on that twit. if he wants to do nothing more than tweet mindless comments there is a place for him over on the yahoo boards.
for sake of argument, lets say ggp placed 150 of its 200 properties in bk. if during the bk process, all properties placed in bk were "lost", then ggp would have its operating company and some 50 properties left. if ggwpqp "survives" bk and equity is not wiped out but it is diluted and ggwpq files a plan of reorganization which is approved, they will issue "new" stock. however, that does not in itself address the portion of the company which was not placed into bk. i am still of the feeling there could be two classes of stock after bk. one class would represent those properties and the mgmt company which were not placed into bk and the other class would represent the value in those properties which were palced into bk but survived with some value to the shareholders. i suppose that in the plan of reorganization a provision could be made to swap "non-bk entity" shares for those of the new company so that in the end only one class of public stock would be out there, but clearly there are two classes of properties which have to be address. those placed into bk and those which were not. this is why i believe that if everything placed into bk were lost that there would still be value in ggp stock because of those properties which were not part of the bk process. what that value is i don's know but i wouldn't be surprised if it were to be $5.00 or so.
time will tell and no amount of speculation will resolve this. only the plan of reorganization which is approved by the court will finally and permanently address this matter.
ackman's latest investor letter
http://seekingalpha.com/article/150537-bill-ackman-s-pershing-square-holdings-update
bk court agenda for 7/22 hearing
http://www.kccllc.net/documents/0911977/0911977090721000000000050.pdf
of note is the spe issue is not on the agenda. this means that it is not open for any additional argument and the parties are still waiting for the judge to issue a ruling. this ruling was supposed to be issued by the end of june and it obviously was not. implications are open for anyone who wishes to speculate but the fact is the judge has not issued a ruling and no order has been filed.
at this point all sides are still waiting for the judge to rule and i doubt that anything will be issued from the bench at tomorrow's hearing. we will just have to hurry up and wait.
cramdowns-lawmakers focus on commercial r/e
http://seekingalpha.com/article/148199-cramdowns-lawmakers-focus-on-commercial-real-estate
background info on centro properties
http://www.centro.com.au/NR/rdonlyres/2E5D2375-CA06-40BE-B0F9-B4CB5E00FF55/0/CentroInvestorIssueOne.pdf
new appointment to board of directors
glenn rufrano, ceo of centro properties, appointed as newest member of ggp's board.
General Growth Properties Announces New Director
Press Release
Source: General Growth Properties, Inc.
On Thursday July 9, 2009, 6:23 pm EDT
Buzz up! 0 Print
Companies:General growth properties inc.
CHICAGO--(BUSINESS WIRE)--GENERAL GROWTH PROPERTIES, INC. today announced the appointment of Glenn J. Rufrano to its Board of Directors.
Related Quotes
Symbol Price Change
GGWPQ.PK 1.39 -0.20
{"s" : "ggwpq.pk","k" : "c10,l10,p20,t10","o" : "","j" : ""} Mr. Rufrano is currently the chief executive officer of Centro Properties Group, a retail investment organization specializing in the ownership, management, and development of retail shopping centers with an extensive portfolio of centers across Australia, New Zealand and the United States, which does not compete directly with GGP. Mr. Rufrano led Centro Properties Group through its successful restructuring during the current credit crisis. From 2000 until its acquisition by Centro Properties Group in April 2007, Mr. Rufrano was chief executive officer of New Plan Excel Realty Trust, Inc., as well as a member of that company’s board of directors. Mr. Rufrano spent 17 years as a partner at The O’Connor Group, a diversified real estate firm.
“Glenn’s CEO and restructuring experience combined with his regional shopping mall expertise will be invaluable to the Company as we continue to develop the plan to emerge from bankruptcy. We are delighted to be able to strengthen our Board with this latest addition and look forward to benefiting from his insights and experience,” said Adam Metz, chief executive officer of General Growth Properties.
GGP Information
The Company currently has ownership interest in, or management responsibility for, over 200 regional shopping malls in 44 states, as well as ownership in master planned community developments and commercial office buildings. The Company’s portfolio totals approximately 200 million square feet of retail space and includes over 24,000 retail stores nationwide. The Company’s common stock is trading in the pink sheets under the symbol GGWPQ. The Company and certain of its subsidiaries filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code on April 16 and April 22, 2009. The Chapter 11 cases are being jointly administered under case number 09-11977 (ALG).
Forward Looking Statements
This press release contains forward-looking statements. Actual results may differ materially from the results suggested by these forward-looking statements, for a number of reasons, including, but not limited to, the impact of our bankruptcy filing, our ability to refinance, extend or repay our near and intermediate term debt, our substantial level of indebtedness and interest rates, retail and credit market conditions, impairments, land sales in the Master Planned Communities segment, the cost and success of development and re-development projects and our ability to successfully manage our strategic and financial review and our liquidity demands. Readers are referred to the documents filed by General Growth Properties, Inc. with the Securities and Exchange Commission, which further identify the important risk factors that could cause actual results to differ materially from the forward-looking statements in this release. The Company disclaims any obligation to update any forward-looking statements.
the creditor is "essentially" secured. while that is essentially true, if the liabilities are greater than the assests, then the creditor is essentially screwed in proportion to that shortfall.
my point was that this order was further support for ggp's position that they were not an insolvent company. for the court to order payment which is 100% on the dollar supports that and provides a look through the window of this process.
additionally, if every creditor is "essentially" secure then there would be no reason for secured debt to trade at a discount.
order entered permitting asset sales
http://www.kccllc.net/documents/0911977/0911977090708000000000005.pdf
this order was entered today and it's interesting to note that it was the motion of south street seaport limited partnership. also of interest is that the dimeo construction mechanics lien for the natick development has been addressed. this shows that either ggwpq and/or the court appear to intend to honor claims at 100% on the dollar. the dimeo claim is being satisfied by paying 80% of any residential sale proceeds to dimeo and the remaining 20% to ggp until such time as the dimeo claim is fully satisfied. i view this as a positive indication of ggwpq's ability as well as its intention to pay its debts.
now, if the spe motion is decided in ggp's favor, i believe that will serve to bring ggp and its lenders together to hammer out an agreement of some sort which will permit the beginning of the process to draft the plan of reorganization.
while i realize that deadline has been asked to be extended 6 months into ealy 2010, that's ok. each positive step along the way should help pave the way for a final solution which will preserve shareholder equity, even if somewhat diluted.
while i would rather see the share price at $3.00 as opposed half that, guess we should just get used to pps volatility until real news comes out. today was one of the highest volume days in quite some time and maybe that was a reaction to the announcement that ggp would have to pay the increased interest amount on the two las vegas properties. again, i view that as a positive. another indication that ggp can pay full freight which has been the basis all along that ggp was not involvent, but rather suffered from a lack of liquidity.
ordered to pay higher interest on 2 las vegas malls
NEW YORK, July 7 (Reuters) - General Growth Properties Inc (GGWPQ.PK), which filed for bankruptcy in April, will have to pay lenders on two of its Las Vegas malls nearly $3 million in back interest, under a court ruling filed on Tuesday.
The ruling relates to $650 million in loans secured by Fashion Show Mall and $250 million in loans on Shoppes at the Palazzo, shopping centers located on the Las Vegas Strip.
Loans on both malls were made in early 2008 and called for monthly interest payments of LIBOR plus 2.25 percent. But General Growth defaulted on the loans in November 2009 by failing to repay the principal when the loans matured.
The lenders agreed not to foreclose on the properties in exchange for the mall company continuing to pay interest at a higher rate, LIBOR plus 6 percent.
General Growth, which owns or operates more than 200 malls, filed for Chapter 11 bankruptcy protection on April 16. Along with the parent company, 166 of its malls also filed in U.S. Bankruptcy Court for the Southern District of New York.
From the start, U.S. Bankruptcy Court Judge Alan Gropper had ordered the company to continue to pay interest on its secured loans at the level prior to the filing.
The Chicago-based operator argued that the original rate was the correct payment level, but Gropper agreed with Deutsche Bank AG (DBKGn.DE), the loans' administrator, who argued for the higher rate called for on April 15.
Gropper ordered General Growth to pay $2,085,776 for back interest due on Fashion Show and $806,074 for back interest on the Palazzo. (Reporting by Ilaina Jonas)
no ruling on spe's until next week at the earliest.
not so sure the referenced rumors are even good.
since there were motions filed today both in support of and in opposition to the removal of the spe's from the bk, it is apparent that the judge permitted these additional filings as a result of the hearing last week. obviously no ruling by the judge, which was rumored to be at the end of june which has now come and gone. if today was the deadline for filing these motions maybe that is an indication the judge will be doing some reading over the holiday weekend. seems apparent there will not be a ruling regarding the spe's until next week at the earliest.
unsecured creditors join ggp to oppose removal of spe's from bk
this is good news!
http://www.kccllc.net/documents/0911977/0911977090702000000000003.pdf
transcript of 6/26 hearing won't be coming anytime soon
if anyone on this site is in nyc, you could go to the bk court and get access. absent that, guess we will only get someone's interpretation of the meeting re: who said what to whom.
guess we will just have to wait for the judge's order re: disposition of the spe's included in the bk.
Transcript regarding Hearing Held on 6/26/09 11:10 AM
Remote electronic access to the transcript is restricted until
9/28/2009. The transcript may be viewed at the Bankruptcy
Court Clerks Office. [Transcription Service Agency:
Veritext, LLC.]. (See the Courts Website for contact
information for the Transcription Service Agency.). Notice
of Intent to Request Redaction Deadline Due By 7/6/2009.
Statement of Redaction Request Due By 7/20/2009.
Redacted Transcript Submission Due By 7/30/2009.
Transcript access will be restricted through 9/28/2009.
(Richards, Beverly) (Entered: 07/01/2009)