General Growth strikes deal with lenders

By Associated Press
Friday, November 20, 2009

Mall operator General Growth Properties, which filed the largest U.S. real estate bankruptcy case in history earlier this year, said Thursday that its lenders have agreed to restructure some $8.9 billion in shopping mall mortgage loans.

The agreements, which cover loans on more than 70 malls, could enable some of the shopping centers to exit bankruptcy before the end of this year, the company said.

Thomas Nolan Jr., General Growth's president and chief operating officer, said he hoped the deals would lay the groundwork for restructuring another $6 billion in mortgage loans on other shopping malls.

The company, which is based in Chicago, is the second-largest mall operator in the nation and owns or manages more than 200 malls, including Landmark Mall in Alexandria and Tysons Galleria in McLean.

The real estate investment trust and roughly 166 regional shopping centers and subsidiaries filed for Chapter 11 protection in April.

At the time, it reported $27 billion in debt. The company racked up the heavy debt load in an aggressive expansion during the height of the real estate boom and was unable to service it when credit markets dried up during last year's financial crisis.

Some lenders complained that General Growth had unfairly dragged healthier subsidiaries into bankruptcy with it.

The lenders agreed to extend the due dates on the loans to between January 2014 and as far off as 2018. But in return, they will be getting back what they originally were owed, plus interest and other bankruptcy-related costs.

In addition, General Growth will be held to stricter oversight on its loans, including a requirement that it beef up its reserves in certain conditions.

Because the plan calls for General Growth to pay off the loans in full, it will retain the equity in the shopping centers, including the Ala Moana Center in Honolulu and the Harborplace & the Gallery in Baltimore.

The agreements must be approved by the bankruptcy court.

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