General Growth Properties Inc. (NYSE: GGP) is getting a lift this morning on what many would consider bad news. The REIT has replaced its chief financial officer and suspended its dividend, a day after a report that executives have been selling their stock. Based on yesterday’s near-50% slide, Wall Street is trying to take this in stride.
CFO Bernard Freibaum is out effective immediately and will be replaced by Edmund Hoyt on an interim basis while a search for a permanent replacement is conducted. Hoyt has been the chief accounting officer since 2000.
Due to the current uncertainty and volatility in the capital markets,the company has suspended its dividend. If it had maintained thatpayout, shareholders would have been clipping a 13% yield atyesterday’s closing price.
Yesterday’s sell-off came from reports out of the Wall Street Journalshowing that between Sept. 23 to Sept. 25, Freibaum had unloaded 1.6 million shares to take home more than $28million.
General Growth noted that Freibaum had sold about 2.95 million sharesyesterday to cover margin calls. He still owns roughly 1.3 millionshares of General Growth Properties stock and he has roughly $3.4million of margin debt outstanding.
We had previously featured this company as one of the troubled REIT’s facing hurdles in the tight capital markets and contracting economy.
Shares are indicated up more than 30% at $10.49 right before the open.After yesterday’s tanking stock price its 52-week trading range is now$7.08 to $57.84.
Jon C. Ogg
October 3, 2008