Owner of Cottonwood Mall, Fashion Place falls in trading

General Growth reports loss along with Kimco Realty

General Growth Properties Inc., the second-largest U.S. mall owner and the owner of the Cottonwood and Fashion Place malls in Utah, and Kimco Realty Corp., the largest owner of community shopping centers, plunged in New York trading after cutting their earnings forecasts for the year.

General Growth, based in Chicago, cut its forecast for 2008 funds from operations, excluding items, saying it now expects to earn $2.85 to $2.95 a share. It had expected $3.42 a share.

Kimco on Wednesday forecast 2008 funds from operations of $2.20 to $2.45 a share, citing "substantial dislocation in the credit markets and recent turmoil in the equity markets," after earlier forecasting a range of $2.70 to $2.78 a share.

Owners of malls and community shopping centers are facing a drop in retail spending as unemployment rises, real-estate values fall and the economy weakens. Consumer spending fell 0.3 percent, matching the biggest drop in four years, and the U.S. lost the most jobs in five years in September.

"The consumer is in pain and lacks confidence," Kimco Chief Executive Officer Milton Cooper said on a conference call Wednesday. "I think retailers will have a pretty tough 2009, unless there's a new zoom in our economy and the housing market comes back."

Shares of Kimco, based in New Hyde Park, N.Y., fell $2.71, or 12 percent, to close at $20.59. General Growth plummeted $2.24, or 50 percent, to $2.25, the company's biggest decline since its initial stock sale more than 15 years ago. General Growth has declined 95 percent this year and Kimco has dropped 43 percent.

General Growth also reported a wider third-quarter loss and abandoned its quarterly dividend. Last month, it fired Chief Financial Officer Bernard Freibaum after he sold 2.95 million shares to meet margin calls and put off new development plans.

During a conference call Wednesday, analysts and investors criticized General Growth executives for refusing to give details of loans the company's trying to renegotiate. Interim Chief Executive Officer Adam S. Metz said that while the company "will continue to release loan information in the aggregate," it won't discuss loans individually.

The mall owner last week announced the replacement of CEO John Bucksbaum with Metz. Bucksbaum remains chairman. Thomas H. Nolan Jr. was named interim president in place of Robert Michaels, who remains chief operating officer.

The sale of properties is part of General Growth's recovery plan, and the company expects to announce completed transactions by the end of the year, Metz. General Growth intends to sell malls in Las Vegas, and it has funded $1.7 billion of new or replacement debt since June 30. It has about another $958 million of borrowings maturing by Dec. 1 that still needs to refinanced and extended.

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