Monday, February 23, 2009

General Growth Properties in Default Under Some Loans

In an 8-K filing sneaked late on Friday after close, the highly leveraged mall operator General Growth Proprties announced that as a result a termination on February 12 of several forbearance agreements with lenders, and being unable to enter into forbearance agreements for some other loans it is in default under several of its loans. As noted in the 8-K:
The Company is currently in default under certain of its loans. As previously announced, the Company has entered into forbearance agreements with certain of its lenders pursuant to which such lenders have agreed to forbear from exercising certain of their default related rights and remedies under such loans. However, the forbearance agreements related to mortgage loans secured by the Company’s Fashion Show and Palazzo shopping centers located in Las Vegas, Nevada expired on February 12, 2009. The expiration of these forbearance agreements permitted the lenders under the Company’s 2006 Credit Facility and 2008 secured portfolio facility to terminate the previously announced forbearance agreements related to these loan facilities. However, the Company has not received notice of any such termination, as required by the terms of such forbearance agreements. In addition, the Company has also been unable to enter into or extend forbearance or similar agreements for its other mature secured mortgage loans, and there can be no assurance that it will be able to do so. The Company continues to work with its lenders with respect to loans under which it is in default or may be in default in the near future.

Curious to note that semi-private Citi is leadlender in yet another CMBS bankruptcy. GGP is slated to report earnings today after market close, and will be closely watched by investors as it will likely be in breach of its Free Cash Flow Coverage covenant which has a 1.6x threshold, and will also present a better picture of the decimation within the commercial real estate market. Seeing how the company may already be in bankruptcy (at least technical), all of these concerns may be unwarranted. Sphere: Related Content
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TraderMark said...

Awaiting this one with interest to see if the Ackman bet pays off./

luther b said...

...with bated breath...

more to see if citi & ubs are willing to engage in some mutually assured destruction on their way to hades.

GGP is a suitcase nuke that will pop SRS into the stratosphere if it goes off.

tremors galore

Tyler Durden said...