This is the first in a series of articles designed to showcase the historical predictive success of BoomBustBlog and the research team behind it. We will detail several research topics from devastating bank failures to cataclysmic macro events, to unseen monopolies in the making - all to illustrate the value of BoomBustBlog relative to the mainstream media, specialized financial and business media, sell side Wall Street analysts and even think tank and regulatory bodies.

We will kick off this series with our research on what was the 2nd largest commercial REIT in the United States...

BoomBustBlog Coverage on General Growth Properties Inc.

Realizing the impending crisis in commercial real estate and the deteriorating economic fundamentals in the US, BoomBustBlog, written by Reggie Middleton, pointed out the trouble General Growth Properties Inc. had and its impact on its stock price in an article (BoomBustBlog.com's answer to GGP's latest press release), early in 2008. According to the article, the possibility of GGP filing bankruptcy was rising with debts payment falling due. The article was published in January 2008, 15 months before GGP filed for Bankruptcy.

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Key Highlights:

BoomBustBlog

Reggie Middleton, through his articles, provided comprehensive and some of the earliest warnings about a challenging operating environment for GGP in the wake of deteriorating macroeconomic environment in the US and the Company's substantial financial debt liability. Based on his analysis GGP, a highly leveraged firm was heading into a refinancing-induced liquidity crunch and might have to file for Bankruptcy. Some of the critical points, as highlighted by Reggie, which eventually led to GGP filing for Bankruptcy, includes:

• Declining rentals of commercial real estate pushed by a slowdown in US consumer spending and a rising unemployment rate
• Tightening credit market resulting in refinancing challenges for the huge debt liability for GGP
• The increasing interest burden on the huge debt obligation and inability to outperform in a tight operating environment
• Low capitalization rates for the properties acquired in 2006-2007 (they simply overpaid by buying at the top of a bubble)
• Falling Stock prices owing to a slowdown in the commercial real estate sector
• The distress caused by loose a lending market and sub-prime mortgage crisis
• Insiders trading activities

The Wall Street Journal

In its first article published in October 2008, WSJ hinted of probable distress in GGP as GGP replaced its chief executive officer and president in a bid to keep its debt load from dragging the Company into Bankruptcy.

In the second article published in January 2009, WSJ pointed the likelihood of a bankruptcy filing for mall giant General Growth Properties Inc., threatening to overlay one of the biggest real-estate bankruptcies ever as GGP was struggling to pay US$2.6 billion credit which was about to mature.

Notably, Reggie had pointed out these facts many months before the article released by WSJ, with his first articles released in the beginning of 2008. At the end of Q4 2007, GGP had US$2.6 billion of debt maturing in 2008. At the end of Q1 2008, GGP had USD2.8 billion due.

Reuters

In its article published in April 2009, right after GGP filing for Bankruptcy, Reuters discussed the reasons leading to Bankruptcy.

Reuters pointed out the failure of GGP to restructure its debt of USD27.29 billion due to the ongoing global financial crisis.

Reuters also pointed out the Bankruptcy of GGP could signal further troubles for other financial institutions who are General Growth creditors.

Notably, Reggie Middleton, in his article in BoomBustBlog, had already pointed this out over a year earlier - that GGP was finding challenges in refinancing its debt obligations due to tightening credit market.

The New York Times

In its article published in April 2009, right after GGP filing for Bankruptcy, The New York Times pointed out the reasons that let GGP file for Bankruptcy.

NYT pointed out that General Growth's Bankruptcy was widely expected as the commercial real estate market was weakening, and GGP was unusually dependent on mortgage financing, as its debts totaled US$27 billion.

NYT also pointed out that GGP could not persuade investors who own more than US$2.25 billion of its bonds to waive payments due in 2009 as debt maturities mounted.

According to NYT, the fall of GGP was seen as a looming crisis in commercial real estate.

Business Insider

In its articles published in December 2009, after 8 months of GGP filing for Bankruptcy, Business Insider pointed out the comparison between the two case studies published by Bill Ackman and Hovde Capital and also stating their facts, that led GGP file for bankruptcy.

Bill Ackman presented the report with its bullish views on the malls and retailers which according to the Hovde Capital are wrong and proved to be wrong. But according to Whitney Tilson’s rebuttal article, the Hovde’s bearish case paints an inaccurate picture of rapidly declining financial performance, then misstates NOI, and then applies an inappropriate capitalization rate a rare trifecta of poor analysis. Also what Whitney Tilson’s said in its article is that, GGP based on their belief that the Company is very likely in the near future to either exit bankruptcy or be acquired.