Mall landlords trim debt with Chapter 11

Pandemic lockdowns, tenant bankruptcies and crushing debts helped drive another mall REIT to seek government assistance in restructuring its balance sheet. Washington Prime Group filed for Chapter 11 bankruptcy protection this week, becoming the third mall REIT in a year to do so, joining CBL and PREIT.

Washington Prime was created when Simon spun off its lower-tier properties in 2014. To boost revenue, Washington Prime is transitioning many of its 102 properties from enclosed malls to open-air town centers and refilling former department stores with new users. But its $3.8 billion debt load has become unmanageable, especially with government lockdowns and tenant failures choking off cash flow.

Before filing for Chapter 11, Washington Prime secured $100 million in debtor-in-possession financing to fund operations. The REIT also prearranged a deal with its secured creditors to pursue a reorganization that provides some return to equity holders and trims some $920 million from the company’s balance sheet. Its restructuring proposal gives senior lenders new debt and unsecured noteholders a debt for equity swap. The REIT also will conduct a $325 million equity rights offering.

Like CBL and PREIT, Washington Prime hopes to move quickly through the restructuring process, in part by having a prearranged pact with lenders. The company is aiming for a late summer exit from bankruptcy.

PREIT emerged from bankruptcy protection on Dec. 11. It has extended its debt maturity schedule and now has access to $130 million in new capital to support its operations, including continued renovation and transformation of its 19 malls. Meanwhile, CBL, which owns 107 properties, plans to emerge from bankruptcy protection by November. The REIT is eliminating $1.5 billion of debt through its own restructuring agreement.

Temple launches online real estate master’s specializing in undervalued areas

Temple University’s Fox School of Business has launched an online Master of Science in Real Estate degree. “Our program will offer everything our competitors are teaching — investment, finance, valuation, construction — but our secret sauce will be teaching students how real estate can be used as a way to transform undervalued communities and assets,” said David Wilk, director of the Temple Fox Real Estate Center and assistant professor of finance. “The program will focus on innovation, inclusion, infrastructure and optimization.”

WashREIT cashes out of retail

One of the largest owners of commercial property in the Washington, D.C., market is selling off its office and retail assets to focus on multifamily. The private REIT will sell its remaining eight retail properties — which include Spring Valley Village and Chevy Chase Metro Center in the District of Columbia and Montrose Shopping Center in Rockville, Maryland. The company also agreed to sell its 12-property office portfolio to a Brookfield Asset Management fund for $766 million. Both portfolio sales are expected to close in the third quarter. WashREIT will use the proceeds to buy multifamily properties in the Southeast — including Atlanta, Raleigh-Durham and Charlotte — and to repay outstanding debt. It owns about two dozen apartment communities in the D.C. metro area.