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Las Vegas Review Journal :

General Growth borrowed to create a massive portfolio of more than 200 properties in 44 states, including a $14 billion deal in 2004 to purchase the Rouse Co., which owned Fashion Show mall, Summerlin Centre and several other Las Vegas properties.

Company stock started slipping several months ago as prospects for consumer spending waned.

Shares went into freefall more recently when investors realized the confluence of the credit crunch with an emerging recession would make it difficult, if not impossible, for General Growth to make good on its debts.

Financial blogger Reggie Middleton, whose detailed criticisms of General Growth were posted online at www.boombustblog.com in January, months before management acknowledged serious problems, said the news Monday wasn't a surprise.

"Of course it could have," been prevented, said Middleton. "They didn't take care of the problems."

He criticized management not only for over-leveraging the company long ago but for compounding the problem through mismanagement.

Middleton said General Growth officials heaped blame on short sellers for forecasting a demise, got the company added to the list of firms protected from short sellers that was created in September to protect banks, then dumped millions of their own shares to meet margin calls.

"The latter part of the share price compression was the management's own making," Middleton said. "They owned a lot (of stock) on margin. They sold more shares than speculators like me ever would."...

... Wally Brewster, General Growth Properties senior vice president of marketing and communications, said the malls are healthy on an operational level...

... As for the notion that General Growth officials would seek a buyer for the entire company, "We always look at all the options."

Brewster also responded to the idea that company officials could have averted the problem by taking action earlier.

"I think we stand on our success of the past 50 years," Brewster said. "We are now dealing with an environment I don't think the U.S. has seen since the Great Depression."...

...  Moore agreed with Middleton that the moves on Monday aren't likely to preserve General Growth as a complete entity. He added that current problems could have been averted had management girded the balance sheet before the credit markets went south.

The moral of the story?

"Leverage is very, very dangerous," Moore said.

In November and December of 2007, I plainly forecasted this turn of events in painfully explicit detail Don't tell me this could not have been seen coming. Greed and avarice vs. ignorance - the battle of the vices...

 

The following links and accompanying summaries were penned up to a year ago. No, I didn't use a crystal ball, I used a spreadsheet and some (un)common sense.

 

Must read content tie-ins

  Short summary of the 3 elements of this report

1.       There is very clear evidence that GGP is heading into a refinancing-induced liquidity crunch.

2.       One-time items are holding up deteriorating core operational performance.

3.       There is evidence that GGP is misrepresenting itself and breaking securities laws.

Many themes currently broadcast in the news directly apply to GGP – its situation is one of high leverage in the face of a weakening consumer and an evaporating debt market.  It’s a family-run business that tripled its size through a major acquisition when the debt markets were healthy, and is now left scrambling.  There appears to be dissension between the founding father and his now-CEO son over some of the tactics that they have resorted to recently, which appear to be questionable.  If the core operations continue to deteriorate in the continued absence of a functional debt market, the 2nd largest mall REIT in the US will simply run out of cash and no amount of accounting or financial gimmickry will be able to hide that fact.

 For those who do not normally follow my blog, the usual list of GGP research:

1. GGP and the type of investigative analysis you will not get from your brokerage house
(Archived/Reggie Middleton's Boom Bust Blog/MyBlog)
This missive is more than probably any outside investor in GGP knows about GGP, plus some. The accuracy of the contents below is not guaranteed nor warranteed in any form or fashion. I try my best t
Saturday, 14 June 2008

2. GGP Shenanigans: How much value do you place on the credibility of management?
(Archived/Reggie Middleton's Boom Bust Blog/MyBlog)
This is a continuation of GGP and the type of investigative analysis you will not get from your brokerage house, basically an update to include the latest earnings information. And yes, this is st
Tuesday, 05 August 2008

3. My latest take on GGP
(Archived/Reggie Middleton's Boom Bust Blog/MyBlog)
We have looked at GGP’s plan for raising non-debt capital through private participation. This  model was actually completed right before  GGP announced their equity offering, so t
Tuesday, 25 March 2008

4. GGP management to apologize???
(Archived/Reggie Middleton's Boom Bust Blog/MyBlog)
GGP has ended up doing exactly what I anticipated they would do November of last year. My research has been proven correct to the very end. They issued a rather derogatory press release and calle
Monday, 22 September 2008

5. GGP seeks alternative financing? Ah hah!
(Archived/Reggie Middleton's Boom Bust Blog/MyBlog)
I have a fairly deep well of CRE research on the blog now, and a focus on GGP in particular. This mirrors my investment style. I will concentrate on a few well reserached ideas and ride them out. He
Tuesday, 15 April 2008

6. GGP comes full circle to my analysis' ultimate conclusion
(Reggie Middleton's Boom Bust Blog/MyBlog)
...roughly 84% of his holdings. Must read content tie-ins from last year and earlier this year. GGP is a good example of the the time frame necesary to nurse an idea to fruition. I held GGP fro...
Friday, 03 October 2008

7. GGP update
(Archived/Reggie Middleton's Boom Bust Blog/MyBlog)
...orrowing will be tough, to understate the situation... and from what can be seen below, it looks like GGP's stockholder composition bodes ominously for the stock performance if our predictions come ...
Wednesday, 10 September 2008

8. Reader commentary on GGP
(Archived/Reggie Middleton's Boom Bust Blog/MyBlog)
The GGP equity questions post generated some buzz amongst my blog readers. I will post some of the buzz and urge all to comment with any insight or expertise you may have on the topic. These obse
Friday, 11 April 2008

9. And even more on GGP...
(Archived/Reggie Middleton's Boom Bust Blog/MyBlog)
This appears to be harp on GGP insider sales day. First a comment frrom a BoomBustBlogger, then my own observations: From a blog reader - VP sells 50k shares, then CEO buys 10k shares VP
Monday, 11 August 2008

10. Questions that I have regarding General Growth Properties recent equity funding
(Archived/Reggie Middleton's Boom Bust Blog/MyBlog)
I had my analysts take a closer look at the GGP financing and, quite frankly, there are a lot of unanswered questions. I figured I would throw some of it out into the public domain to see what the rea
Thursday, 10 April 2008

11. GGP reports Q1 results, and as I anticipated...
(Archived/Reggie Middleton's Boom Bust Blog/MyBlog)
For those that don't know, GGP represents one of my most comprehensive research projects. Click here for a list of my work and here for reader commentary on potential shenanigans. For everybody
Monday, 28 April 2008

12. GGP's woes are going mainstream
(Reggie Middleton's Boom Bust Blog/MyBlog)
The Wall Street Journal has run a story on GGP management and their massive margin calls. Senior executives at General Growth Properties Inc. built up the mall owner by loading it with debt and amas
Tuesday, 30 September 2008

13. More on the accuracy of this blog's research
(Archived/Reggie Middleton's Boom Bust Blog/MyBlog)
...ortgage banking (Countrywide and WaMu), monoline insurance (Ambac and MBIA), commercial real estate (GGP and REITS), investment banking (damn near all of the big boys), commercial banking (the Doo ...
Sunday, 24 August 2008

14. Reggie Middleton Bloggin' for Dollars
(Archived/Reggie Middleton's Boom Bust Blog/MyBlog)
... mortgage banking (Countrywide and WaMu), monoline insurance (Ambac and MBIA), commercial real estate (GGP and REITS), investment banking (damn near all of the big boys), commercial banking (the Doo D...
Wednesday, 20 August 2008

15. Reggie had a profitable day (week, month, year), unfortunately...
(Reggie Middleton's Boom Bust Blog/MyBlog)
... Banks, Broke... Wednesday, 21 May 2008   Then there is GGP. I've got a few emails inquiring about them. They closed at $4.71 today. Damn! I closed my po...
Tuesday, 07 October 2008