Mall owner General Growth Properties Inc. told a bankruptcy court on Thursday it had reached a deal with lenders and servicers to restructure $8.9 billion of mortgages on 77 malls in hopes of removing them from bankruptcy protection by year end.
The pact is the first step for General Growth in extracting from bankruptcy court the 166 malls it put under Chapter 11 bankruptcy protection in April. The company still must strike similar pacts with lenders on another $6 billion of secured debt as well as $6.5 billion of unsecured debt.
The upfront cost of the deal for General Growth is at least $350 million, including a $100 million fee paid to the creditors, payment of past-due amortization and reimbursement of their legal fees, according to people familiar with the talks. General Growth will pay those costs from the $692 million of cash it has on hand, according to a separate person familiar with the matter.
The lenders involved in the deal are servicers overseeing securitized mortgages and life-insurance companies including Prudential Financial Inc. The loans range from $10 million to more than $1 billion on malls including Ala Moana Center in Honolulu. Attorney Greg Cross of Venable LLP handled negotiations for the lenders.
General Growth is "close" on similar deals with other lenders among its remaining $6 billion in secured debt in the bankruptcy case, this person said.
So, we're looking at all their pre-2014 mortgages getting extended. Feeling pretty good about GGP exposure put on during the last couple of quarters.