Quail Springs Mall owner struggling with debt

[metro]

progressiveboy, FYI...Nichols Hills also has a Dior and another very upscale score which name currently escapes me.

[Patrick]

Thanks for the information. Did your friend mention what other tenants are on the waiting list?

I can't go into complete details, but Fossil and Steve Madden are on the list. That's really all I can disclose for now.

[OKCTalker]

General Growth hires bankruptcy law firm

By John Spence, MarketWatch
Last update: 3:59 p.m. EST Nov. 20, 2008

BOSTON (MarketWatch) -- Troubled mall developer General Growth Properties Inc. has hired a law firm as bankruptcy counsel as it tries to restructure its debt and avoid a bankruptcy filing, according to a published report Thursday.

General Growth has lined up law firm Sidly Austin but that doesn't necessarily mean a bankruptcy filing is imminent, The Wall Street Journal reported.

Shares of the real estate investment trust have lost more than 99% this year and closed Wednesday at 40 cents.

The company has $900 million of mortgages due next week on properties it owns in Las Vegas, and the company has asked for an extension, the Journal reported. Wall Street analysts say the company is close to violating certain covenants of its bonds, and General Growth's scheduled debt payments rise in coming years, according to the report.

Chicago-based General Growth, which was dropped from the S&P 500 Index, has warned it could seek bankruptcy protection if it is unable to roll over its debt.

The Journal reported the company is in talks with banks including Deutsche Bank, Goldman Sachs (GS) and Wachovia Corp. to extend the deadline on the $900 million due on Nov. 28, and is also trying to sell a trio of luxury malls in Las Vegas.

Goldman Sachs is overseeing the company's financial restructuring and leading efforts to sell the malls, and General Growth's other advisers are Morgan Stanley and Deutsche Bank, according to the article. The paper said if the mall giant files for bankruptcy, it would be the biggest real estate failure in recent memory.

REIT shares have been under pressure with many expecting commercial real estate to take a hit as the economy slows. There are also concerns about the companies' debt loads with capital markets essentially locked down. The market for commercial mortgage-backed securities has tumbled this week.

"The most notable equity REIT implosion this year, of large-cap mall REIT General Growth Properties, has dragged down REITs across the board, instilling liquidity fears in investors," wrote Stifel Nicolaus & Co. analysts in a recent research note.

An exchange-traded fund following the sector, SPDR Dow Jones REIT ETF, is down 57% year to date and is trailing the S&P 500 by more than 13 percentage points.

"Virtually all of the year-to-date REIT sector losses have accumulated in October and November," the Stifel Nicolaus analysts observed. "REITs are the most volatile publicly traded equity sector, routinely putting up total daily returns equal to what the sector should logically do in an entire year."

Shares of retail and industrial REITs have been particularly weak as investors brace for a slowdown in consumer spending.

[seamless]

I must say i enjoy going to the mall good place to people watch and i adore the foodcourt best place to eat alone if you ask me.. Quail springs is markedly less busy than its counterpart penn square in my personal opinion.. Location is overrated trust me im a former business owner with a hand in the till if not the pulse of the far northwest corridor of OKC and i must tell you it is a demographic lie.. just look at how many places have closed out there in recent memory. Dont wanna get to weird here but its what i like to think of as the new America lots of younger couples just starting out with two degrees, two nice cars, two nice kids, two decent jobs maybe, and not a drop of discretinary disposable income between um.. outside of the holdiays your lucky on a weeknight if you ever see even the main parking lots up front more than a half full.. where as penn square any given night can be pretty wall trafficked. the commercial property out that was is overvalued significantly over half the large companies between may and portland on memorial i.e. Dobson, AT&t, numerous other smaller ones have over the past 4 to 5 years have either straight laid off people or moved or gone through serious restructuring efforts...

[lil0kie]

Penn Square is land locked. I've worked in the mall for over 15 yrs. Simon amazed everyone by letting 2 restaurants come in to already tight parking lot. Lot of employees thought they would build a 2nd parking garage before adding any new buildings. They recently took out a multi million dollar center court fountain from an earlier remodel. I think malls will become a thing of the past. Most of them are asking way too much for spaces. I agree with others, I doubt Simon will buy or want Quail Springs mall. I've been told that there only about 3 or 4 companies that own all the USA malls. Sad. Wish a local investment group would buy some of the local malls.

[CuatrodeMayo]

I must say i enjoy going to the mall good place to people watch and i adore the foodcourt best place to eat alone if you ask me.. Quail springs is markedly less busy than its counterpart penn square in my personal opinion.. Location is overrated trust me im a former business owner with a hand in the till if not the pulse of the far northwest corridor of OKC and i must tell you it is a demographic lie.. just look at how many places have closed out there in recent memory. Dont wanna get to weird here but its what i like to think of as the new America lots of younger couples just starting out with two degrees, two nice cars, two nice kids, two decent jobs maybe, and not a drop of discretinary disposable income between um.. outside of the holdiays your lucky on a weeknight if you ever see even the main parking lots up front more than a half full.. where as penn square any given night can be pretty wall trafficked. the commercial property out that was is overvalued significantly over half the large companies between may and portland on memorial i.e. Dobson, AT&t, numerous other smaller ones have over the past 4 to 5 years have either straight laid off people or moved or gone through serious restructuring efforts...

Your screen name makes alot of sense now.

[jbrown84]

Indoor malls will not go away completely, at least not in cold climates.

For any kind of extended shopping experience (going to 2+ stores), I would much rather park and go inside an indoor mall with a much more aesthetically pleasing set up than go to any strip mall with a desolate parking lot out front and no one using the sidewalks.

[sgray]

I am right by Penn Square and just when I think I've seen people around here sell everyone on their last load of crazy, they drop another restaurant right into the middle of an already crowded parking lot! I could understand if that was just open grass land with 'develop' written all over it, or if the lot never filled up.

I know I keep telling myself I've seen it all, but around here I'm still waiting for the big one--when business owners start closing up shop when business gets good--makes perfect sense, you know? Follows the same crazy logic.

Dee Dee Dee!

[gmwise]

Ok, its not often but I agree with jbrown, not all malls will disappear.
But look at how some need a updated coat of paint.
The lack of concern by ownership says it all.

[Urbanized]

I've always thought that Penn could put structured parking in the lot area that is bounded by the intersection of Penn and NW Expressway. That portion of the surface parking is so tight that it doesn't work very well as surface.

Realign the traffic pattern in the new garage, and you could buy a lot more driving convenience, and a few stories of parking could buy hundreds of new spaces. The mall would be bookended on the NE and SW corners by garage, so structured parking would be convenient to all points in the mall. Sure, there would be a garage between the main streets and the mall structure itself, but that isn't unheard of. The Galleria in Dallas does this.

If you increased the structured parking along the footprints of the existing surface, you could expand the mall itself north. Heck, one wing in the north lot from the Macy's/Men's Wearhouse area, running west toward Cheescake factory, and in front of BC Clark, would increase the size of the mall substantially. I think your lost parking would be replaced, and then some, by the structured parking proposed above.

[jbrown84]

I think the best plan would be to expand on the north as you suggest, with a garage attached to the north side of that.

The problem with a garage on the SW corner is that there is no way for it to attach to the building except going directly into Dillards and I don't think they would want that setup. Plus I think they would prefer to keep the visibility on that corner.

[sgray]

All of this common-sense thinking would be too much for the mall owners to comprehend.

[metro]

I think the best plan would be to expand on the north as you suggest, with a garage attached to the north side of that.

The problem with a garage on the SW corner is that there is no way for it to attach to the building except going directly into Dillards and I don't think they would want that setup. Plus I think they would prefer to keep the visibility on that corner.

Dillards WOULD want that setup, the mall management and other tenants probabably would not. By default, it would give Dillards more business just by sheer foot traffic patterns. One only has too look 3 hrs south to the Galleria in Dallas to figure that out.

[metro]

All of this common-sense thinking would be too much for the mall owners to comprehend.

I wouldn't say that, Simon runs a good mall (reason it's #1 in state and one of the highest in the entire region). Simon Properties are some of the best malls in the nation, and their tenants reflect that. If anything, they probably have all this in long term plans, but considering the economy, a slowing retail sector for quite some time now (over 1 year), and national trends of outdoor lifestyle centers, they are probably being more cautious.

[betts]

progressiveboy, FYI...Nichols Hills also has a Dior and another very upscale score which name currently escapes me.

Chanel.

[sgray]

I dont doubt that there are malls that are designed somewhat well...I have seen some decent ones myself. There are areas where things are built much better and show signs of creativity and intelligence in the finished product. Fact is most of them are not in OK. Concerning the long-term plans, most of the malls we have have been here for quite a long time and in cases such as penn square, not much of anything has changed, even when the ownership changes. Not much changed when the economy and business was great...no long-term stuff happened then, so I don't expect to see much of anything other than quick, cheap short-term money-makers like the restaurant in the parking lot.

[metro]

I dont doubt that there are malls that are designed somewhat well...I have seen some decent ones myself. There are areas where things are built much better and show signs of creativity and intelligence in the finished product. Fact is most of them are not in OK. Concerning the long-term plans, most of the malls we have have been here for quite a long time and in cases such as penn square, not much of anything has changed, even when the ownership changes. Not much changed when the economy and business was great...no long-term stuff happened then, so I don't expect to see much of anything other than quick, cheap short-term money-makers like the restaurant in the parking lot.

Penn Square? Not much change? Their tenants have changed DRAMATICALLY, they are the only mall in the metro that have luxury and higher end retailers with a waiting list of others years long because their isn't enough space. Density (in your reference to Cheesecake Factory and Elephant Bar) isn't a bad thing. We need more density in this city to see the types of development you are describing. You should know developers and retailers are BIG on density statistics.

[jbrown84]

Not much changed?

Simon did an extensive interior remodel that made the mall much more attractive to upscale retailers. They have plans to add several levels to the current parking garage. They added two very popular, exclusive restaurants and another that's exclusive if not quite as popular. They added Jos. A Bank, White House Black Market, Coldwater Creek, Apple Store, Coach, J. Jill, Sephora, Strahovski, Aldo, Pottery Barn Kids, Aspen, and quickly found a solution to Ward's departure.

They also require stores to remodel or build in a new space every five to seven years or so (not sure exactly). This has led to almost every store in a different or remodeled space since 15 years ago or so.

[bluedogok]

Simon recently renovated Barton Creek Mall down here and Lakeline Mall in Northwest Austin, they are very aggressive in making their product current and marketable. They also control most of the malls here in the Austin area, 11 in all. The only one that they don't seem to control is the new Hill Country Galleria mixed use city center. It is "truly" a "city center" because it has the Village of Bee Cave City Hall and Public Library on the site.

I have some gripes about Simon, but it isn't with how they manage retail, it is how they manage the commercial office space like it's a mall. They should have a commercial property manager managing that and stay with their expertise. Our offices are in The Domain and they seem clueless most of the time when it comes to the commercial side, I have no idea how they handle the residential component.

I think there will always be a place for the enclosed mall, but I think they will evolve into regional centers and some will close much like Shepherd Mall, Crossroads and Heritage Park. The "lifestyle centers" will be what is built along with the "big box malls" that are popping up everywhere.

[Urbanized]

Penn Square is one of the most heavily changed malls in the region over the past 25 years or so. Not just as far as finishes go; much of the mall was actually OUTSIDE until the remodel in the '80s.

Regarding building a new parking structure between the mall and the NW Expressway/Penn intersection: you can see an example of the way a parking structure is nestled like this by clicking here. I guarantee you that Nordstrom has FAR more people enter from the garage side than the side that faces the camera. The added benefit is that there is a bit of a buffer between traffic and the structure itself. Most of the traffic is happening in the garage, which has easy in/out. That leaves the road between the two structures a little less congested, without people crawling by, insisting on finding the spot closest to the building.

Regarding visibility from the street: that's an easy fix. Accessory signage on the exterior (streetside) of the garage itself. The sign actually ends up being closer to the street, and MORE visible to passersby.

The space I'm talking about at Penn functions so poorly as a surface lot currently. I think it would work far better with a thoughtfully planned garage on that footprint, and would create the added benefit of freeing up other surface parking space for mall expansion.

[sgray]

Yes, the penn square lot has gotten worse since the addition of the restaurants. It's not that the restaurants are the problem--but that the lot was already crowded before they took away spaces, further compounding the problem. Most everything there looks and functions like a last-minute addition. I live right next to Penn Square Mall and have shopped there nearly every week or so for more than 20 years, until recently. I see the difference when I visit other malls outside of OK. They are different--well thought out and laid out much better. Just recently got to visit a mall near Gulfport, MS where my friend lives. And they are much smaller of a community than we are, but the mall was 10 times as nice! Right when you drive up to it and walk inside, everything seems like it was planned right. The thing is about the same size as Penn Square, but the ceiling inside is lower.

The parking at Penn Square was bad enough on regular days, but now with the removal of spaces, I dont even try to visit on or near the holidays like I used to. I do drive by occasionally on busy days and congested is certainly an understatement for what I see. When I was younger, I was a more frequent visitor to Quail Springs as I lived closer to it then.

I think the main point here is that it doesn't matter if you have the best stores in existence inside--if the place is not designed to handle the flow of shoppers efficiently and comfortably then it's kind of like, what's the point?


I am in agreement with some that suggest that malls as we know them way very well start to disappear. With all the strip malls popping up all over the place, seems like folks are finding much of what they need there.

[Urbanized]

Penn, specifically, definitely seems to avoiding much of the anti-mall movement that is sweeping through retail nationwide. That doesn't mean that it won't happen to them, so they definitely need to stay sharp. But malls are dying all over the country, and Penn seems to keep thriving. I think it has a lot to do with location. Surely it does, in fact.

I read something recently - I don't remember the source, so pardon the ambiguity - that stated 2009 (I think, though it may have actually been 2008) would be the first year in a few decade with not a single traditional mall completed the entire calender year. This means there were no malls under construction anywhere in the U.S. that would be completed within that calender year. That is pretty incredible, if you think about it. Traditional malls are definitely in a deep slumber, if not dead, as new development.

[jbrown84]

I think the main point here is that it doesn't matter if you have the best stores in existence inside--if the place is not designed to handle the flow of shoppers efficiently and comfortably then it's kind of like, what's the point?

Other than the parking, what are you referring to?

[sgray]

That's my main point, jbrown. Just what I said. If you can't go there and get in the door, then what does it matter what's inside? Metro mentions density and that's a great idea--the only problem is that around here they don't take into consideration that really the only way to get there is by car (setting aside hours of dealing with a bus or long bike rides/walks as an option) so they just start taking away spaces in an already over-crowded lot that was not even designed right to begin with. Automobile parking is the critical point between the customer and the businesses that operate there. And they slap it on the back burner like it plays no part in the success of their business.

You know, someone mentioned a better designed parking garage and, to me, that coupled with the restaurants in the parking lot would balance out the whole density issue. They just don't think that way here...they're just out for that one extra quick buck, and in the long run they would be more profitable if they weren't so focused on that quick short-term buck and look at why other areas build the way they do.

But it is what it is and I think, at least around here, that folks are flocking to the strip malls because they can get in and out and not have to fight the malls issues.

[jbrown84]

Well, as I said, they will be expanding the garage by at least 2 levels in the coming months. I suppose it could be delayed due to the economy, but they do have a plan. They aren't ignoring the problem.

The fact remains that at least half their stores are metro exclusive, so if people want to shop at those stores, they WILL go to Penn Square.