Hawaii shoppers will find it's business as usual at the malls owned by General Growth Properties Inc., but vendors, tenants and members of the state's commercial real estate community could suffer in the aftermath of the retail giant's Chapter 11 bankruptcy filing.

Few were surprised yesterday when bankruptcy claimed its largest real estate victim to date. The nation's second-largest mall owner warned of possible foreclosure late last year when the tightening credit market made it more challenging to refinance maturing mortgage debt.

“;Operationally our business is strong, but the credit crunch has caused the problems that we are having today,”; said General Growth Properties spokesman Jim Graham.

General Growth, which owns Ala Moana Center and Ward Centers, among other Hawaii properties, has $29.6 billion in assets, according to its bankruptcy filing. However, in the current recessionary environment, the company's total debts have grown to $27.3 billion.

“;In real estate, if you can't borrow, you can't grow,”; said Honolulu-based real estate analyst Stephany Sofos.

The Chapter 11 filing, which went into effect yesterday, permits daily operations to continue and allows the company to pay employees and to pay for the goods and services that they contract for after the filing date. However, it prevents anyone from collecting debts owed by the company, such as the loan payments it ordinarily would make to the bank or payments to vendors for merchandise or services received before the filing.

“;They still owe us some money, and we are uncertain how this bankruptcy will affect that,”; said Bill Wilson, president of Hawaiian Dredging Co., which settled a $9 million claim with General Growth in February.

Wilson said he's hopeful that General Growth will continue to fulfill its commitments but that if payment is stopped or slows, it will affect Hawaiian Dredging and 25 or so other firms that are owed portions of the money.

General Growth's filing was anticipated by members of Oahu's building community, Wilson said, but it adds more uncertainty.

“;This is a company that was extremely successful for many years, and now they have had to undertake this action,”; he said. “;It certainly suggests that everyone should be more careful about extending credit.”;

It's also unclear how the filing will affect a $16 million lien filed against General Growth by contractors for work on the Ward Village shop.

“;From an operational standpoint, the regional malls should continue to maintain their facilities such as landscaping, janitorial and security, as these expenses are funded by the monthly collection of tenant CAM (common area maintenance) charges and not out of GGP funds,”; said Mike Hamasu, director of research and consulting at Colliers Monroe Friedlander.

The concerns are raised where GGP funds are required for payment, Hamasu said.

“;Situations such as tenant-improvement allowances and capital development projects are likely to be impacted,”; he said. “;Bankruptcy is likely to hamper GGP's efforts to secure new tenants and may possibly impact the renewal of existing tenants.”;

Graham said GGP “;will be working with our vendors and will work with the courts to resolve these issues.”;

In addition, General Growth tenants and would-be tenants could find that they have to wait longer to obtain leases or get space improvements. And, the landowners that General Growth represents, such as Kapolei Commons and Windward Mall, could find their ability to attract sought-after tenants compromised because their leasing company no longer has leverage to sweeten the deal.

“;Vacancy rates are potentially going to increase among their regional malls here in Hawaii,”; Hamasu said. “;Also, if their ability to secure new tenants in their owned properties is affected, projects where GGP is not the owner and is serving as the landlord leasing agent may prove to be problematic.”;

Despite the filing, General Growth is confident of its ability to be successful, especially in Hawaii, Graham said.

“;The leases depend on the quality of the location, and almost under any circumstance we still believe that our properties will be just as desirable as they have been,”; he said.

General Growth will continue offering properties for sale and shopping for capital partners to raise working capital and to fund outstanding projects such as its planned residential community at Kakaako's waterfront, Graham said.

“;We do believe that our assets in Hawaii are extremely valuable and will remain so,”; he said, adding that Whalers Village, Queen Kaahumanu Shopping Center, Kapolei Commons, Kings' Shops and Windward Mall were not involved in the bankruptcy.