Mall Owner Facing Tough Times Ahead

All stocks are down of late but General Growth Properties is downgraded. General Growth, a giant Real Estate Investment Trust (REIT), owns the St Louis Galleria Mall and roughly 200 more across the country. That is a lot of food courts.

NEW YORK – General Growth Properties Inc. shares plunged 48 percent Tuesday on concerns the real estate investment trust may not be able to refinance its debt maturities amid the larger credit crisis.

The stock shed $3.62 to $4.13 in afternoon trading. It fell as low as $3.51 earlier in the session, eclipsing its previous 52-week low of $7.08.

“The REIT’s stress is mostly due to over-leveraging acquisitions in the past five years,” Stifel Nicolaus analyst David Fick said in a note to investors on Monday

He said the company had bought too many properties using debt financing, which will soon come up for refinancing. It has also recently replaced its chief financial officer and suspended its dividend. (AP via Forbes.com

General Growth Properties (GGP), the nation’s No. 2 shopping mall company, may soon become the next giant felled by the credit crunch. Analysts believe that Chief Executive John Bucksbaum, who put the 54-year-old outfit deep into hock as he bought up retailing real estate across the country, could be forced to sell the company and its more than 200 malls nationwide because he’ll be unable to make payments on its staggering $27.4 billion debt load. “GGP is at the end as a going concern,” says RBC Capital Markets analyst Richard C. Moore II. “It’s time for them to go away.” (BusinessWeek)

That is some serious debt! How much is payments on that? The BusinessWeek article indicates debt service at “payments of about $1 billion due next month and an additional $3 billion next year.” A buyer for the entire company or individual properties will likely be found soon. Don’t worry, if you are headed to Restoration Hardware or The Apple Store in the Galleria this weekend they’ll be open.

So much of our country is saddled in massive debt. What is happening to General Growth is what happened to St Louis-based Pyramid Construction earlier this year – a melt down based on buying too much on credit.

Long ago the retailer lived over his shop. You had big department stores but those were often confined to just one market, not massive chains. These earlier retail models had debt but nothing on the order of General Growth.

Debt is everywhere. In suburbia that is about all they’ve got. In older walkable areas at least the fall back will be the more sustainable built environment. This is not a St Louis city vs county thing but an urban vs exuburban thing that doesn’t pay attention to municipal or county boundaries.

Malls used to be built all the time but the country may only see a handful built this year. They are not the sure thing they once were. In 50 years the indoor mall surrounded by a sea of free parking will be a thing of the past. It is the transition that will be interesting. We are already in the midst of it now.

Some malls will be razed with the sites built out in a more walkable model. Often an anchor store or two is left but the rest is taken out. This is already being done in other markets.

Turning the mall outward is a less drastic measure where some stores can be accessed from the outside rather than inside the main halls.

Retail real estate has gone through major changes over the last 50-100 years. We should expect change to continue. I recall the mall that opened when I was a kid — it was a short bike ride from my parents house. Today, 35 years later or so, it is a sad shell of its former self. Some discount store is in the old Montgomery Wards space and other anchor department stores have closed as well. Surrounded by highways but not much else the prospects are not good for this mall.

The mall is a victim of changing buying habits — on one hand the shift to a preference for a more walkable environment and the rise of Wal-Mart on the other hand. I hope the CBD is once again the retail center of metropolitan areas but I’m not going to hold my breath on that. I will be watching to see what becomes of General Growth Properties.

Work In Lucas Park Continues on Saturday 10/11/08

For a month now volunteers have been addressing long deferred park maintenance in Lucas Park. The City is stepping up and helping — workers have been getting the irrigation system functional again and each time we work they haul off the debris. The wooden benches have been painted, sidewalks swept, trees manicured and so on. St Patrick’s Center sent over the Clean Team to power wash the stone benches and concrete sidewalks.  The park is more pleasant for all users.  This Saturday (10/11/08) we will be back in the park from 10am to noon.

We will be planting a low-maintenance ground cover called Liriope (wiki) in a few areas to help control erosion so the sidewalks stay mud-free. The plants are donated by yours truly. Regular work such as sweeping the sidewalks will also be done as the cypress trees quickly clutter the sidewalks with organic debris.

We will skip the 18th and resume on the 25th. On the 25th we will be having a little party in the park geared toward the little one — face painting, games, story telling, pumpkin carving, etc. 3pm-5pm on the 25th. That day we’ll have sweeping to do again before we start on decorating the park for Halloween. Stop by with the youngster(s).

Skipping ahead to November we have our design charrette on Monday the 17th from 6pm to 9pm. Architects, especially Landscape Architects are encouraged to participate to help flesh out ideas from residents & users of the park. The location will be the adjacent Crepes In the City restaurant which opened earlier today. They are located at 500 N. 14th at St Charles St. Those who live near the park should mark this on your calendar — this is your chance to have input in what you want from your neighborhood park. From the ideas generated a master plan will be formulated.

Mayor Slay To Address Downtown Residents on Thursday 10/9/08

Mayor Slay will attend and speak to downtown residents at the annual meeting of the Downtown Residents Association (DSLRA) this coming Thursday evening (10/9/08) at 7pm. The meeting will be upstairs at the Schlafly Tap Room at 2100 Locust Street.

No doubt Lucas Park and homelessness will come up at the meeting. Ald Kacie Starr Triplett recently announced that she had met with Mayor Slay and got his commitment for funds for improvements to Lucas Park. Triplett issued the following on October 1st:

(ST. LOUIS) – This morning, Alderman Kacie Starr Triplett (D-6th Ward) met with Mayor Francis Slay to discuss issues facing many of her downtown constituents. During the meeting, Mayor Slay committed to supporting additional funds for the maintenance and renovation of Lucas Park and promised to join Triplett at an upcoming public forum to discuss homelessness and hear from downtown residents.

“I am grateful to Mayor Slay for meeting with me. It is extremely important for the mayor to understand how critical these issues are to my constituents.”

“Homelessness is a regional problem. Yet, as a city we must take responsibility to ensure that appropriate services and resources are provided to our residents who are most in need. It is equally important that we continue to make downtown living the best it can be by promoting a safe, clean and pleasant environment for the residents who have chosen to invest in the revitalization and resurgence of Saint Louis’ city center.”

As sixth ward alderman, Triplett represents the heavily revitalized downtown loft district. Final details regarding the date, time and location of the community forum will be released at a later date.

People are taking notice. Jake Wagman over at the Post-Dispatch Political Fix noted:

When freshman Alderman Kacie Starr Triplett took office last year, she inherited a diverse ward with new construction, trendy restaurants and funky boutiques.

But her predecessor also left her an intractable problem that nobody at City Hall has so far been able to crack: Homelessness downtown.

For Triplett, the concern is focused on a specific area, Lucas Park, a one-acre oasis that sits parallel to the burgeoning Washington Avenue loft district. (full post with great picture)

As an aside, I’ll drive the four blocks from my house to the meeting as I cannot get from my house to the Tap Room in my wheelchair without having to go in the street due to frequently missing curb cuts. Sad being forced to drive a lousy four blocks.

How Much Car Do We Each Need?

As regular readers know, for many months I survived in St Louis without a car. I had a trusty 2004 Honda Metropolitan 49cc scooter to get me where I needed to go. Unable to drive the scooter following my stroke I bought a different 2004 model — a Toyota Corolla. With a 130hp, 1.8-liter 4-cylinder engine it was a prudent choice.

Still, I find it to be a larger car than I’d prefer. The EPA ranks it a “compact” based on the interior volume. Earlier Corollas were in the sub-compact class.

As I slowly make my way from the elevator to my car in the center of the basement parking garage in my condo building I have a chance to check out the cars of my neighbors. The vehicles run the gamut from a mid-90s Corolla to a new Range Rover, Hummer H2, several very late model BMWs and a Mercedes. We’ve got a couple of Mini Coopers and a new Yaris, Toyota’s entry-level sub-compact.

As you can imagine, the engine size, fuel consumption, and cost of these vehicles is all over the board. My neighbor that has the parking space to the left of mine recently got a used Nissan Altima (a 2005 or ’06 model). Like my car it is a 4-door 5-passenger sedan. It is a bit larger, qualifying as a midsize vehicle rather than a compact. It also has a 250hp, 3.5-liter V-6 engine.

The Altima is 14 inches longer than my Corolla, although the wheelbase is only 7.8″ longer. Interior volume is 103 cubic feet compared to mine at 90 cubic feet. So it is bigger but does that justify an engine nearly twice as big when measured in displacement and horsepower? His Altima has a combined EPA rating of 21 vs 28 for mine — or 25% less.

The U.S. auto makers are in trouble these days — they got caught with too many trucks & SUVs in the product mix when fuel prices increased dramatically. With respect to vehicle & engine size have makers simply been responding to consumer demand or have consumers simply been buying what has been offered — that is if smaller more economically choices had been available some would have bought those instead? I think it is a bit of both — that people wanted bigger and faster but that some consumers would have bought smaller vehicles had more choice been offered.

As mentioned earlier I would do fine with a smaller car, perhaps much smaller. Since I started driving again in July I’ve had two other passengers in my car only once. For the most part I’m the only person in the car with the occasional front passenger. A 2-passenger vehicle like the smart fortwo with its 1.0-liter 68hp 3-cylinder engine would suit me perfectly.

I think we all tend to justify a larger vehicle than necessary for our needs. But look around, most cars have only the driver in them. Kids are often the justification for larger vehicles. But how often do you really drive juniors entire baseball team somewhere? What if our communities were more compact so that taking the team out for a victory pizza would mean a 2-3 block walk?

Do we all need cars because our built environment demands them or does our built environment look & function as it does because we all have cars? Just over half a century ago most major American cities were more compact and had transit systems in place to get people to work, shopping and recreation. New York City is still this way — having a car in Manhattan is more a liability than a convenience. Get out in the far suburbs & exurbs of any metropolitan area in the U.S. and you’ll need a car if you want to go from Old Navy to Applebee’s to work to home.

Do we buy larger more luxurious cars because the commutes & total miles driven are so much greater? I’d feel safe in a fortwo given that I spend most of my time inside the city and seldom outside of I-270 but if I drove from Troy to Arnold daily I might want a larger vehicle just to feel safe & comfy driving all those miles.

I’m afraid we’ve built ourselves into a corner to the point where the midsized car with the V-6 will continue to be the norm. Automotive “need” is certainly a function of place of residence and proximity to work.

Man’s Best Friend, A Uniter or a Divider?

Last evening I attended Larry Rice’s “Night with the Homeless” rally inside The New Life Evangelistic Center located exactly two blocks East of my downtown loft on Locust. In the coming days I’ll do a more complete report. With some exceptions Rice’s words were intended to paint the loft dwellers as newcomers hellbent on pushing out the homeless.

In the last month as local residents took an active roll in cleaning up deferred maintenance in Lucas Park I’ve seen so much more positive interaction between residents & resident homeless. I’ve become engaged in the struggle to the point where I’m doing what I can to understand the situation these people are in and to help in any way I can to get a few out of being homeless.

Although I knew this before I hadn’t really experienced it — much of the homeless population is just like you or me but without shelter. Last night KMOV’s Robin Smith said a very true statement – -“Most of us are one paycheck away from being homeless.” Sad but true and with our current economy things may only get worse.

To me dogs are like kids — I don’t have one but in small doses I like other people’s. Dogs can be a way to unite people. I’ve seen homeless & dog owners talking about the breeds and so on.  Granted,some of the dog owners need to learn to pick up after their dogs. Earlier this week Larry Rice was seen in Lucas Park with a photographer picking up dog doo. Photo taken and he is gone. The rest of us have spent hours in the park cleaning up green mud from under benches after spending more hours assessing the issues in the park and where we could make a difference. We’ve addressed maintenance issues long ignored by both the city & Rice.

Rice, I believe, doesn’t want residents & the homeless to have positive interaction as that will break down the wall he is trying to build between us.  I see dogs & the park as a means of increasing discussion & understanding on all sides.

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