Owner of Westlake, Alderwood malls says it will be business as usual despite bankruptcy filing

General Growth Properties, a Chicago-based company whose giant real-estate portfolio includes Westlake Center in downtown Seattle and Lynnwood's Alderwood mall, sought protection from creditors in bankruptcy court Thursday.

But its two Seattle-area malls, as well as Spokane Valley Mall & Plaza, are among 70 shopping centers that were not included in the Chapter 11 bankruptcy filing. The four Washington state properties are owned by subsidiaries in which General Growth has a shared stake.

The company handed out letters Thursday to store managers at Westlake Center, saying it would continue to operate as usual.

"Our restructuring efforts will be invisible to the tens of thousands of customers who visit our properties every day," the letter said. "They will see no change in the services and amenities we provide."

Four of the 158 General Growth malls included in the bankruptcy filing are in Washington, in Bellingham, Spokane, Kelso and Aberdeen.

General Growth had been struggling for months to win relief from billions of dollars of debt, much of which is past due. The company had been trying to sell some of its landmark properties, including Westlake Center, as it asked lenders to forgo debt payments, but amid recession and a credit crunch found little room to maneuver.

In a court filing, General Growth Chief Executive Officer Adam Metz said prospective buyers of several highly valued assets could not secure financing, and the widespread perception that the company would file for bankruptcy protection chilled interest.

Westlake Center, which is topped by a 25-story office tower, has been on the market since the fall.

Bellevue Square owner Kemper Freeman Jr. said that as General Growth restructures, it might be more likely to sell Westlake than Alderwood because the downtown mixed-use project "is farther away from their core business."

"But right now, who could buy it?" said Freeman, who professed no interest. "Right now, you're just trying to stay alive."

Some retail tenants seemed unsure about what to make of Thursday's filing in New York.

"They keep telling us everything's fine," said Michelle Maxwell, who owns a clothing store called Bad Reputation at Westlake. "I assume things will stay the way they are."

Roger Fredericksen, who owns the Millstream gift shop at Westlake, said he's confident "everything will be OK."

"We have leases to protect us, and we have a steady crowd," he said.

The bankruptcy could compound the woes of the banks and institutional investors that funded General Growth. By reducing the company's expenses and potentially slashing the price of its real estate, it could enable General Growth to undercut other owners and operators of shopping malls, contributing to the economy's downward spiral.

The company owns or manages more than 200 regional malls in 44 states, among other properties. Its holdings include Ala Moana Center in Honolulu, Boston's Faneuil Hall Marketplace and the Fashion Show in Las Vegas.

One of the last straws for the company was a request days ago from a group of bondholders that the trustee for the bonds sue to enforce payment.

General Growth said it has lined up $375 million to fund its operations while in bankruptcy. The financing is from the hedge fund Pershing Square Capital Management, one of the firm's major investors.

General Growth's stock closed at $1.05 Wednesday, far below its 52-week high of $44.23.

The company's bankruptcy filing listed assets of $29.6 billion and debts of $27.3 billion.

Its major investors, directly or indirectly, include fund manager Vanguard Group and Fidelity's FMR LLC, according to the filing. Big creditors include the bank Eurohypo.

The big losers in the company's decline include its founding Bucksbaum family. As of March 23, Chairman John Bucksbaum and other family interests held more than 2.6 million shares, according to a regulatory filing.

Freeman said he has known the Bucksbaums and other General Growth senior managers for decades. "They're as good an operator of shopping centers as there is," he said.

The company's mistake, he said, was in having too much debt come due at a time when the credit markets are broken.

"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 of Chapter 11," Metz said Thursday in a news release.

"Our core business remains sound and is performing well with stable cash flows," Metz said.

Seattle Times business reporters Eric Pryne and Amy Martinez provided local coverage; David S. Hilzenrath of The Washington Post provided national coverage.