US shopping mall operator, Washington Prime Group (WPG) is staring at bankruptcy filings under Chapter 11 of the US bankruptcy code. The group had missed a $23mn interest payment last month and is actively negotiating with lenders to avoid a default before the end of the 30-day grace period. The company, which owns over 100 malls, has been adversely affected by the pandemic with its rent collection dropping 52% in Q2 last year before improving to ~87% in Q3. The tenants of WPG include JC Penny and Ascenda Retail, which had been forced to shut down and have been under court protection. The lower collections from rent have impacted mall owners’ ability to pay back debt. Law firms Kirkland & Ellis and investment bank Guggenheim are assisting the group to handle its upcoming maturities including a first-lien term loan due in June this year. Late last year, the group had failed to convert ~$260mn unsecured bonds into $175mn of preferred equity issued by a new special purpose entity. WPG’s competitors CBL & Associate Properties and Pennsylvania Real Estate Investment Trust had been forced to file for bankruptcy last year.

Washington Prime’s 6.45% 2024 were down ~10% by 6.63 points to trade at 63.5 cents on the dollar on the secondary markets.
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