Zero Hour Approaching For Severely Indebted Seaport Developer

Tom Acitelli — Fri, 05 Dec 2008 16:27:08 -0400

Mall maker and owner General Growth Properties got the nod in the summer to redevelop the South Street Seaport with an ambitious vision that included an apartment/hotel tower, a new retail complex and a boutique hotel. In the early autumn, the city tapped General Growth to lead the development of a massive mixed-use, mixed-income complex in East Harlem.

Shortly thereafter, a supremely bad run of events walloped the publicly traded firm, including the exit of its chief executive under the weight of $27 billion in debt obligations and then the de-listing from the S&P 500 because of a consistently low share price.

Now, according to today's Wall Street Journal, it looks as if Citigroup, one of General Growth's lenders, has run out of patience, and is forcing a Dec. 12 showdown on repayment.

If the banks don't approve a further extension by the new, Dec. 12 deadline, they could declare General Growth in default on that debt, triggering cross defaults on other General Growth debts and forcing the company to seek bankruptcy protection.

We are trying to find out what bankruptcy would do to the Seaport and East Harlem projects. Stay tuned.

Observer » Zero Hour Approaching For Severely Indebted Seaport Developer

Zero Hour Approaching For Severely Indebted Seaport Developer