Chicago Illinois Real Estate Blog

Shares in General Growth Properties Inc. jumped as much as 64% Friday after the shopping-mall owner said it was suspending its dividend and its chief financial officer had left the company.

The move comes as the global financial crisis has fueled fears that the Chicago-based real estate investment trust (REIT) won’t be able to pay off more than $4.3 billion in loans coming due this year and next. General Growth shares have plunged in recent weeks, increasing the likelihood that the company will be sold, possibly to rivals Simon Property Group Inc. or Westfield Group, says Rich Moore, an analyst at RBC Capital Markets in Cleveland.

Bernard Freibaum, who had been General Growth’s CFO since October 1993, “is no longer employed by” the company, it said in a news release Friday. Mr. Freibaum also left General Growth’s board effective Thursday.

Mr. Freibaum told the company he sold about 2.95 million company shares on Thursday to pay margin debts, the release said. He told General Growth that he owns about 1.3 million shares after the Thursday selling and has about $3.4 million in outstanding margin debt, the release said. Including Thursday’s selling, Mr. Freibaum has sold more than 6 million General Growth shares to cover margin calls.

General Growth said all its continuing executive officers have told the company they’ve paid all previous existing margin debt and will not be selling additional stock to cover margin calls. The company had drawn criticism this week for allowing margin-call sales while being on a list of companies protected from so-called short sales.

General Growth is the second-largest U.S. shopping-mall owner, behind Indianapolis-based Simon, with local properties including Water Tower Place, Northbrook Court and Oakbrook Center. Amid mounting worries that the REIT will be unable to pay off loans maturing in the next few years, investors have bailed out of the company’s shares, which closed at $7.59 Thursday, their lowest point since 1996.

General Growth shares rebounded Friday, rising as much as $4.78, or 64%. The shares were at $10.81 in late-morning trading on the New York Stock Exchange.

General Growth said it “continues to be current on all of its debt obligations and is continuing its full financial and strategic review with its advisors.”
Source