Bill Ackman’s successful bankruptcy negotation for the shopping mall operator General Growth Properties (GGP) shows the way other commercial real estate players may be able to avert crisis.
Essentially, GGP faced more of a near-term liquidity crunch due to maturing debt, rather than critical business problems.
Thus once GGP was able to negotiate an extension of its debt maturity with some of its creditors, then its largest problem was solved.
The following is an excerpt from Mr. Ackman’s Pershing Capital’s December newsletter, which discusses his firm’s GGP investment in depth::
For far more detail, read the whole thing over at Distressed Debt Investor.
The GGP deal shows how shareholders and creditors can work together for mutual benefit, especially to avoid ratings downgrades which one imagines would hurt both parties. Thus this handling of GGP sheds some light on how even distressed commercial real estate companies’ problems may be manageable — and profitable for bold investors.