General Growth Properties Stock Price Rise Puzzles Wall Street

NEW YORK, NY, April 7, 2009—Wall Street today is grappling with its biggest little mystery in months: What is triggering debt-loaded General Growth Properties’ stock price to jump 100 percent in the last 17 days?

The common stock of the nation’s second biggest shopping center developer was trading at $1.14 at noon today. On March 21 of this year, the stock was trading at 57 cents.

The stock began its flirtatious climb Friday, April 3, when it closed at 72 cents. On Monday, April 6, near the closing bell of the New York Stock Exchange, the stock was trading at 98 cents, up 37 percent. It closed at $1.

The stock has climbed from a 52-week low of 24 cents on Nov. 12, 2009. Its 52-week high came on May 16, 2008 when it reached $44.23 per share.

The stock rise is particularly puzzling to knowledgeable Wall Street analysts because Chicago-based General Growth and its subsidiary, The Rouse Co. of Columbia, MD, are struggling under a combined debt load approaching $10 billion, according to previous company disclosures and as previously reported by Real Estate Channel.

General Growth CEO Adam Metz himself has alluded to a possible Chapter 11 bankruptcy protection filing if company lenders couldn’t or wouldn’t extend GGP’s outstanding loans. The company itself is solvent, with about $168 million in ready cash on hand.

Metz previously disclosed major company lenders already have agreed to wait until Dec. 31 of this year for payment on about 40 percent of $2.6 billion in past-due loans.

Now some Wall Street insiders are hinting General Growth officials may have quietly obtained further loan extensions in the past couple of days and that rumor may have triggered the stock’s buoyancy.

The stock price rise has even perplexed General Growth officials themselves.

In a prepared statement, the company said that “as a result of the unusual market activity” in the company’s stock price, the New York Stock Exchange asked GGP to “issue a public statement indicating whether there are any corporate developments that might explain the unusual activity.”

The company said in its statement it is “not aware of any corporate developments” that could have pushed up the stock price so quickly.

The NYSE often asks companies for similar public clarifications when their stock’s share price moves swiftly, up or down, on the Big Board.

The NYSE asks for the clarifications because it wants to ensure that all market players have access, at the same time, to all information and developments that might be moving a specific stock.