GGP Defaults on CMBS loans

Again, others follow GGP more closely than I, but it would be remiss of me not to send you today's headline story. GGP had a maturity default (or near-maturity in 1 case) on three (3) CMBS loans in two different deals, S&P & Moody's quickly downgraded the company to C, multiple executives were changed out, and they face a 5pm (today) deadline on debt unrelated to the CMBS deals.

The kicker on the CMBS deals, is that the malls are performing wonderfully (even though they ARE malls). Here are the numbers:

LBUBS 2004-C4

• Town East Mall
• $105mm outstanding sr. mtg.
• Matures 4/11/09
• 3Q 08 NCF DSCR 2.45 and Occupany at 99%
• 3 Major Tenants: Sears, Dillard's, JCP
• Next Pay Bond: A2 - $185mm outstanding. Likely to extend in foreclosure.

GCCFC 2004-GG1

• Southland Mall
• $81.3 outstanding
• Matured 3/1/09
• 3Q 08 NCF DSCR 2.69 and Occupany at 98%
• 3 Major Tenants: Sears, Macy's, JCP

• Deerbrook Mall
• $73.8 outstanding
• Matured 3/1/09
• 3Q 08 NCF DSCR 2.55 and Occupany at 99%
• 3 Major Tenants: Dillard's, Sears, Macy's

• Next Pay Bond: A3 - $54mm outstanding. Likely to extend in foreclosure.
• Remaining partially pays down A4 - $296mm outstanding

These two deals are likely to face extensions, and there might be some plays around timing that extension - the near-pay bonds are all trading with high-teen yields; and the b-pieces are likely trading for next to nothing. The more interesting CMBS trade would be to pick up near-pays on other CMBS deals with GGP exposure; these would pay off early if GGP has to sell assets. People have already piled in on this trade, though, so you'd be arriving fashionably late.

GGP's maturing CMBS debt by year:

Mat. Year	Curr. Balance	Num. Loans
2009	1,540,257,761	16
2010	3,780,728,494	37
2011	5,233,299,013	39
2012	1,521,498,883	16
2013	1,001,499,652	15