A marketplace in the middle
Operator seeks to sell off lease to avoid bankruptcy
The cash-strapped operator of Faneuil Hall Marketplace has put its rights to run the popular outdoor mall up for sale as it battles to shore up its finances and avoid declaring bankruptcy.
General Growth Properties Inc., the second-largest US mall operator, is offering to sell the rights to operate Faneuil Hall, as well as two other well-known East Coast tourist destinations, South Street Seaport in Manhattan and Harborplace & the Gallery on Baltimore's Inner Harbor.
General Growth is struggling to refinance $900 million in debt to stave off bankruptcy.
An offering circular for the three properties did not carry a price tag.
Faneuil Hall Marketplace is one of Boston's top tourist attractions, and its sale will be closely watched by city officials, merchants, and rival operators. The marketplace consists of four buildings owned by the City of Boston, including the Quincy, North, and South markets. General Growth operates those three, and is selling its lease-hold interests at the marketplace, which had more than $102 million in sales in the 12 months ended Sept. 30.
The city itself owns and runs the fourth building, Faneuil Hall, a historic venue for some of the country's most prominent orators.
A top official said General Growth did not tell the city of its desire to sell its rights to the signature property. "They didn't call us or talk to anyone in city government, which is unfortunate, because I don't think it reflects well on them," said the Boston Redevelopment Authority's director, John Palmieri.
Palmieri said Boston's lease agreement requires that any sale of General Growth's rights to operate the marketplace be approved by the city. "We intend to interpret that agreement strictly, and we will communicate that to them in writing," he said.
Executives with General Growth and its brokerage firm, DTZ Rockwood of New York City, did not return calls for comment yesterday. Chicago-based General Growth bought out the Boston lease from Faneuil Hall Marketplace's previous manager in 2004.
General Growth on Wednesday said that a group of creditors has agreed to extend a deadline for repayment of $900 million in debt related to real estate acquisitions in recent years. The agreement sets a new due date of Feb. 12.
The mall company, which also operates Natick Collection, has been scrambling to sell assets and restructure its finances after using large amounts of debt to acquire property across the country in recent years. It has warned it may have to seek bankruptcy protection.
General Growth has an ownership interest or management responsibility at 200 regional shopping malls in 44 states.
Potential buyers of the Faneuil Hall Marketplace lease, including rivals Simon Property Group Inc. and WinnCompanies, have already approached General Growth about taking over the lease.
A merchants' representative last night said she and other merchants will fight to protect Faneuil Hall's ambiance as an outdoor market.
"We don't want to be sold off like a herd of cattle to a mall company," said Carol Troxell, treasurer of the Faneuil Hall Merchants Association. "We want local merchants with local products. That's what the market has always intended to be."
Casey Ross can be reached at cross@globe.com. 