BOSTON and CHICAGO – No other outside investor is at greater risk than Fidelity Investments if mall owner General Growth Properties Inc. (NYSE: GGP) should collapse, according to Crain’s Chicago Business.

As of Nov. 7, Fidelity funds were second only to the founding Bucksbaum family, and its 24-percent stake in the real estate investment trust (REIT), with General Growth holdings of about 37.17 million common shares, or 13.8 percent, according to data filed with the U.S. Securities and Exchange Commission. Those shares are held by 63 Fidelity funds, some of which have bought shares and some of which have shed shares since the end of last year, when the mutual-funds giant owned 6.8 percent of the REIT, the Crain’s analysis found.

General Growth shares have been plunging all year, despite what the company describes as its “stable, high-quality portfolio of real estate assets in good locations with significant barriers to entry.” (READ MORE) The company – last year, the nation’s second-largest REIT based on market capitalization – this month was removed from the Standard & Poor’s 500 Index as its shares continued to fall. (READ MORE)

The problem? A crippling burden of short-term debt left over from acquisitions such as the 2004 purchase of Rouse Co. – which gave General Growth the Providence Place mall and a number of other retail properties, as well as a “master-planned communities division” that in recent quarters has underperformed the 200-plus-mall retail arm – and the ongoing credit crisis, which has eliminated refinancing options that formerly were routine.

The company is still current on its debts, but faces possible default as soon as this Friday. That is the maturity date for $900 million short-term debt that is secured by General Growth’s Las Vegas properties – Fashion Show Mall, Grand Canal Shoppes and The Palazzo, which the company put on the market last month (READ MORE) – and another $58 million in corporate debt.

General Growth “is working with its syndicate of lenders” to extend those loans. But even if that effort succeeds – as many analysts think likely – the company has said it faces “an additional $3.07 billion of property and corporate debt [that] is scheduled to mature in 2009.”

In September, the company announced it was undertaking “a comprehensive evaluation of its alternatives, both financial and strategic, in an effort to align the market value of the company’s common stock more closely with the intrinsic value.” The effort has since been expanded. Besides seeking buyers for its Las Vegas malls, and other assets, General Growth is now pursuing “a corporate-level capital infusion” and possible “strategic business combinations,” the company said last month.

But, the REIT acknowledges, if those efforts are unsuccessful, it may need to seek bankruptcy protection.

That would wipe out the value of investments held by Fidelity and other shareholders – a hard blow for the mutual-funds giant, which already has announced plans to pare its staff by 2.9 percent across the board, including potentially its Smithfield and Providence offices. (READ MORE)

“Nobody’s lending to anybody in the real estate business, so that’s a challenge, and nobody’s buying real estate, so that’s a challenge,” Jim Sullivan, an analyst at Newport Beach, Calif.-based research firm Green Street Advisors Inc., told Crain’s.

Fidelity Investments – the world’s largest mutual-fund manager and a leading provider of financial services – posted global assets of $3.0 trillion including $1.4 trillion in assets under management as of Sept. 30. FMR Corp. is the holding company for operating businesses Fidelity Employer Services Co., Fidelity Investments Distribution and Operations Co. and Fidelity Technology Group. Additional information is available at www.fidelity.com.

General Growth Properties Inc. (NYSE: GGP) – owner of Providence Place and the Silver City Galleria in Taunton and manager of the Swansea Mall – is one of the nation’s largest publicly traded real estate investment trusts (REITs) based on market capitalization. GGP’s portfolio includes about 200 million square feet of retail space and more than 24,000 stores, as well as stakes in various master-planned community developments and commercial office buildings. Additional information is available at www.ggp.com.