1900 Tamiami Trail North, Naples, FL
The owner of Coastland Center, the country’s second biggest mall operator, filed for Chapter 11 bankruptcy protection Thursday after struggling for months to refinance billions of dollars in debt.
The Naples mall on the southwest corner of Goodlette-Frank Road and Golden Gate Parkway was one of about 70 properties owned by the Chicago-based giant General Growth Properties that did not file for bankruptcy.
The filing is not expected to affect Coastland Center, some analysts say.
Coastland officials declined to comment, referring calls to workers in corporate offices who could not be reached for comment.
Russ Weyer, a senior associate for economic consulting firm Fishkind & Associates in Naples, said Coastland Center and its tenants are in a strong position.
“I would think that it’s a good performing asset and the Coastland Center seems to be doing well despite the economy,” Weyer said. “If I’m a tenant there, I’d have more comfort level in that.”
He also said the mall would be an attractive asset for anyone to buy or hold because it’s a solid performer financially, is not listed in the bankruptcy proceeding is the market is strong.
The mall, which has grown to about 950,000 square feet, opened in 1977 and has been remodeled several times with the latest renovations in 2007.
Weyer said it is a vital part of the Naples economy, not only a factor of sales but because of the jobs and salaries it provides.
Coastland Center is anchored by Dillard’s, Macy’s, J.C. Penney and Sears.
Ed White, Dillard’s general manager who has been with the store for 20 years through several owners, was confident the mall would succeed.
“My initial thought is, to be honest, is much like this store, this mall has continued to be profitable,” White said. “We’re in a market that has been able to weather these very tough times. I’m really glad we’re not going to be affected.”
General Growth and 158 of its shopping centers and other properties filed for bankruptcy protection in U.S. bankruptcy court in New York to try to reorganize its finances and stay in business.
“While we have worked tirelessly in the past several months to address our maturing debts, the collapse of the credit markets has made it impossible for us to refinance maturing debt outside of chapter 11,” Chief Executive Officer Adam Metz said in a statement.
Court records reported company assets of $29.6 billion and nearly as much debt — $27.3 billion.
General Growth launched an aggressive expansion at the height of the real estate boom. Like many homeowners during the frenzy, the company bought several properties at top dollar and now some lenders are unwilling to refinance.
The real estate crisis has been slow to affect the market for retail, hotels and office buildings. But the delinquency rate for commercial loans, while still relatively low, is creeping up and could deepen the economic recession.
Last month, General Growth said lenders waived default on a $2.58 billion credit agreement until the end of the year.
But its Rouse Co. subsidiary couldn’t convince enough holders of unsecured notes worth $2.25 billion as of Dec. 31 to accept a proposal that would let the company avoid penalties for being behind on its payments.
In February, the company reported lower-than-expected fourth-quarter funds from operations and a dip in revenue amid weaker retail rents.
The company has suspended its dividend, halted or slowed nearly all development projects and cut its work force by more than 20 percent. It also has sold some of its non-mall assets.
General Growth said its properties, those that filed for bankruptcy and those such as Coastland Center who did not, would continue to operate as usual.
The real estate giant received a commitment from Pershing Square Capital Management for about $375 million in so-called debtor-in-possession financing, loans that will allow the company to continue operations during bankruptcy.
The Associated Press contributed to this report.