General Growth Properties Gets Life Line

Troubled developer of the stymied Elk Grove Promenade gets six week loan extension

Chicago-based General Growth Properties (GGP) announced it has been granted a six week extension on $4 billion of debt that was coming due.

GGP is the developer of the Elk Grove Promenade mall. Construction of the shopping center located on the city's south side was halted last summer.

As GGP scrambles to sell other properties to raise capital and seeks co-investors for The Elk Grove Promenade, the loan extensions point to another problem for both the GGP and it's creditors - falling prices of mall properties.

While GGP undoubtedly needs the extension, their creditors (which included the beleaguered Citibank: C) know that if they repossess malls, they could be sitting on a portfolio of properties that may hold as little as 25% of the original loan value. Creditors might be unwilling to acknowledge problem loans much as Japanese banks did during during the 1990's, which for Japan was a bad financial decade.

Meanwhile, the Elk Grove Promenade sits half-completed with an muddled future while other area malls generate tax revenues from Elk Grove shoppers.