General Growth, lenders agree on mall debt reworkGeneral Growth...

General Growth, lenders agree on mall debt rework
General Growth says creditors agree to restructure $8.9B in shopping center mortgage loans

By Alex Veiga, AP Real Estate Writer

On 3:16 pm EST, Thursday November 19, 2009

.LOS ANGELES (AP) -- Mall operator General Growth Properties Inc., which filed for bankruptcy earlier this year, said Thursday 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.

"We believe that these agreements provide a basis for consensually completing a restructuring of the debtors' remaining approximately $6 billion of secured mortgage loans and we are hopeful that our other secured mortgage lenders will work with us to reach agreements quickly," Thomas Nolan, Jr., General Growth's president and chief operating officer, said in a statement.

The real estate investment trust, which is based in Chicago, and roughly 166 regional shopping centers and subsidiaries filed for Chapter 11 protection in April. It was the largest U.S. real estate bankruptcy case in history.

At the time, 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.

Because the plan calls for General Growth to pay off the loans in full, it will retain the equity in the shopping centers.

"They're making the lenders whole for the cost of the bankruptcies and they're going to significantly pay down the loans over time so that the lenders are more likely to recover the amounts they're owed," said Greg Cross, an attorney who represents the largest block of secured General Growth creditors.

The agreements must be approved by the bankruptcy court.