Tysons Galleria operator files record bankruptcy

General Growth Properties, owner of premier malls such as Tysons Galleria in McLean, filed the largest real estate bankruptcy in U.S. history Thursday, but analysts say the move is not a sign of retail Armageddon.

General Growth, like many homeowners, paid top dollar in a rush to buy properties earlier in the decade and now finds itself awash in debt with its asset values shrinking.

The company built up $27 billion in debt during its spending spree - which included the acquisition of Columbia, Md.-based Rouse Co. five years ago for $11.3 billion - and became the second-largest mall operator in the nation.

“This is a crisis of capital,” said Malachy Kavanagh, a spokesman for the International Council of Shopping Centers. “And the inability to refinance debt really doesn’t have anything to do with the slowdown in sales.”

The move will not affect shoppers or residents of planned communities such as Columbia, which the company manages. The Columbia property is not included in the bankruptcy filing, the company said.

“Our shopping centers and other properties will continue to offer the same great visitor experience for which our company is so well known,” Adam Metz, General Growth’s chief executive officer, said in a statement Thursday.

The company owns more than 200 malls, including locally the Shops at Georgetown Park and Harborplace & the Gallery in Baltimore. Other properties include Faneuil Hall in Boston and South Street Seaport in New York.

Shop owners in Tysons Galleria said they remain upbeat and credited General Growth for its management of the upscale mall.

“What they did at this mall was practically a 100 percent face-lift,” said Aram Itani, owner of exclusive women’s apparel store Aram Boutique.

“The ideas they implemented, the type of accounts they brought in, it just became such a beautiful center. It’s unfortunate the economy is under such stress,” said Mrs. Itani of Potomac.

She was an original tenant in the mall who left and returned last summer because of General Growth’s management, she said.

Yendi Jackson, owner of 7 For All Mankind, which sells denim and sportswear, said, “They came over today and gave us a letter and said that nothing is in jeopardy, the mall is open for business as usual.

“As far as I’m concerned, I’m satisfied. Everybody’s filing for bankruptcy right now. The economy is going to switch, and our business is fine,” said Ms. Jackson of Herndon.

Weakness in retail spending is causing store owners to press for lower rents and pushing up commercial loan delinquencies, but that is not the main issue for the struggling mall giant, Mr. Kavanagh said.

“General Growth has a strong portfolio. Sales per square foot are up with the industry leaders, occupancy levels are over 90 percent, and their funds from operations have been good.

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