Thursday, General Growth Properties, Inc. (GGP) said it has reached agreements in principle to restructure approximately $8.9 billion of secured mortgage loans. Key provisions of the agreements include maturity date extensions resulting in an average loan duration of approximately 6.4 years from January 1, 2010, with no such loan maturing prior to January 2014, and continuation of interest at the current non-default rate.
The weighted average contract interest rate for the 70 loans covered by these agreements is 5.35%. The all-in-interest rate after amortization of fees paid in connection with these loans is 5.54%.
"We are extremely pleased to reach this consensual agreement with lenders representing more than half of the mortgage debt covered by the bankruptcy proceedings," said Thomas H. Nolan, Jr., president and chief operating officer of GGP.
The company believes that these agreements provide a basis for consensually completing a restructuring of the debtors' remaining approximately $6 billion of secured mortgage loans and expect other secured mortgage lenders will work towards reaching agreements quickly.
General Growth said that the agreements are subject to various conditions and approvals, including completion of definitive documentation and approval of the Bankruptcy Court in the Southern District of New York, where GGP and approximately 166 regional shopping centers and certain other GGP subsidiaries filed for Chapter 11 bankruptcy protection in April 2009.
In addition, certain of the loan extensions remain subject to the approval of the Class B noteholders or mezzanine holders. The company said that it is currently engaged in discussions with these mortgage lenders regarding the definitive documentation and expects to file the plan of reorganization and related disclosure statement with the Bankruptcy Court expeditiously. General Growth said that it hopes to emerge the regional shopping centers associated with the mortgage loans from bankruptcy prior to the end of 2009.
General Growth Properties currently has ownership interest in, or management responsibility for, over 200 regional shopping malls in 44 states, as well as ownership in planned community developments and commercial office buildings.
GGWPQ.PK is currently trading at $6.83, up $ 0.98 or 16.84%.
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