General Growth's Chief Financial Officer resigns
Departure from company redeveloping downtown Columbia follows stock plunge
By Derek Simmonsen
dsimmonsen@patuxent.com
Posted 10/03/08
General Growth Properties Inc., the company redeveloping downtown Columbia, announced today the departure of its Chief Financial Officer a day after its stock price took a dramatic dive.
CFO Bernard Freibaum “is no longer employed by the company,” a General Growth news release stated without elaboration. The company named an interim successor and will begin a search for a permanent replacement, the release stated.
Freibaum was among several top executives at the company who was forced to recently sell large amounts of stock to cover margin calls, which are requests for money to back up stock purchases bought on credit that come after the value of a portfolio falls below a certain point.
General Growth’s stock price dropped by nearly half Thursday, closing at $7.20, the lowest it has been in 12 years. The stock rebounded today, but was still below what it had been at the start of day Thursday.
Freibaum sold about 2.95 million shares of stock Thursday to cover margin calls, but still has $3.4 million worth of margin debt left. All other company executives have repaid their margin loans in full and will not sell any more company stock, the release stated.
The Bucksbaum family, which founded the company, have not sold any stock and will not do so in the future, the release stated. The company is also suspending its stock dividend, which was 50 cents per share, based on “the uncertainty and volatility in the capital markets,” the release stated.
General Growth, the second-largest owner of U.S. shopping malls, owns the Columbia mall and six other shopping centers in Maryland. The company also owns and develops planned communities and is the majority landowner in downtown Columbia.
The company formally submitted its 30-year plan Wednesday to redevelop downtown Columbia with new residential, retail, office and hotel space. The county Department of Planning and Zoning and other agencies are reviewing the proposals and will issue a report in about a month.
Some of the current stock troubles began after General Growth released a statement Sept. 22 saying it was evaluating “financial and strategic” alternatives in order to raise capital and improve its stock price. Those alternatives could include selling assets or stakes in joint ventures, among other options.
Gregory Hamm, regional vice president and general manager of Columbia for General Growth, told the Columbia Association Board of Directors earlier this week that he had every reason to believe General Growth would continue to stay in Columbia. Putting into place the company’s plans to redevelop Columbia is essential, though, because even if another company would take over, the agreed-upon plan would be locked in, he said.
“Now is the time to get it right because we can,” Hamm said. “A year from now, we may not have the opportunity.”
If it gets the proper approvals, the company would not break ground on any construction until late 2010 or even early 2011, Hamm said.
He said he was not worried about gaining financing, because the community is in a prime location between Washington and Baltimore, has a good school system and offers other amenities that make it attractive to developers.
“If there’s capital anywhere, it will be here,” he said.
CFO Bernard Freibaum “is no longer employed by the company,” a General Growth news release stated without elaboration. The company named an interim successor and will begin a search for a permanent replacement, the release stated.
Freibaum was among several top executives at the company who was forced to recently sell large amounts of stock to cover margin calls, which are requests for money to back up stock purchases bought on credit that come after the value of a portfolio falls below a certain point.
General Growth’s stock price dropped by nearly half Thursday, closing at $7.20, the lowest it has been in 12 years. The stock rebounded today, but was still below what it had been at the start of day Thursday.
Freibaum sold about 2.95 million shares of stock Thursday to cover margin calls, but still has $3.4 million worth of margin debt left. All other company executives have repaid their margin loans in full and will not sell any more company stock, the release stated.
The Bucksbaum family, which founded the company, have not sold any stock and will not do so in the future, the release stated. The company is also suspending its stock dividend, which was 50 cents per share, based on “the uncertainty and volatility in the capital markets,” the release stated.
General Growth, the second-largest owner of U.S. shopping malls, owns the Columbia mall and six other shopping centers in Maryland. The company also owns and develops planned communities and is the majority landowner in downtown Columbia.
The company formally submitted its 30-year plan Wednesday to redevelop downtown Columbia with new residential, retail, office and hotel space. The county Department of Planning and Zoning and other agencies are reviewing the proposals and will issue a report in about a month.
Some of the current stock troubles began after General Growth released a statement Sept. 22 saying it was evaluating “financial and strategic” alternatives in order to raise capital and improve its stock price. Those alternatives could include selling assets or stakes in joint ventures, among other options.
Gregory Hamm, regional vice president and general manager of Columbia for General Growth, told the Columbia Association Board of Directors earlier this week that he had every reason to believe General Growth would continue to stay in Columbia. Putting into place the company’s plans to redevelop Columbia is essential, though, because even if another company would take over, the agreed-upon plan would be locked in, he said.
“Now is the time to get it right because we can,” Hamm said. “A year from now, we may not have the opportunity.”
If it gets the proper approvals, the company would not break ground on any construction until late 2010 or even early 2011, Hamm said.
He said he was not worried about gaining financing, because the community is in a prime location between Washington and Baltimore, has a good school system and offers other amenities that make it attractive to developers.
“If there’s capital anywhere, it will be here,” he said.
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