- guardian.co.uk, Thursday 16 April 2009 19.05 BST
America's second largest owner of shopping centres, General Growth, collapsed into bankruptcy protection today with debts of $27bn ($18bn) as "mall fatigue" among cash-strapped consumers took its toll.
General Growth's portfolio of more than 200 shopping centres includes landmarks such as New York's South Street Seaport, Boston's Faneuil Hall and the biggest open-air mall in the world, the Ala Moana Centre in Honolulu, Hawaii.
Its Chapter 11 filing is the biggest bankruptcy for a US property company on record.
The Chicago-based company blamed "broken credit markets" for difficulties in refinancing its loans.
"While we have worked tirelessly in the past several months to address our maturing debts, the collapse of the credit markets has made it impossible for us to refinance maturing debt outside Chapter 11," said chief executive Adam Metz.
Throughout the US, shopping centres have been struggling as the recession bites into consumer spending. Many leading locations have cut back on opening hours. Vacant shops are commonplace and retailers are offering deeply discounted prices.
General Growth's origins go back to 1954 when two brothers, Martin and Matthew Bucksbaum, expanded their family grocery business by building one of the midwest's earliest shopping arcades, the Town and Country Centre in Cedar Rapids, Iowa.
It has accumulated malls across America including Water Tower Place in Chicago and the Grand Canal Shoppes at Las Vegas's Venetian casino. With its partners, General Growth also owns properties in Brazil and Turkey.
The company has been laden with debt since it bought a rival developer, Rouse, for $14.2bn five years ago. As financial problems mounted, General Growth had a management shake-up in October in which Metz replaced Matthew Bucksbaum's son, John, to become the first non-family chief executive since the company was founded.
Experts predict that difficulties will spread among US shopping-centre operators. "This is kind of the beginning of the end," Dan Fasulo of property research firm Real Capital Analytics told Bloomberg News. "This bankruptcy will drive down the values of mall assets in the United States. It's going to put, I believe, more supply on the market than can be absorbed by investors."