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The Honolulu Advertiser
Posted on: Friday, November 20, 2009

Bankrupt General Growth's loans extended


By Alex Veiga
Associated Press

LOS ANGELES — Mall operator General Growth Properties, which filed the largest U.S. real estate bankruptcy case in April, said 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, including Ala Moana Center, could enable some of the shopping centers to exit bankruptcy before the end of this year, the company said.

Thomas Nolan Jr., General Growth's president and chief operating officer, said he hoped the deals announced yesterday would lay the groundwork for restructuring another $6 billion in mortgage loans on other shopping malls.

General Growth is "hopeful that our other secured mortgage lenders will work with us to reach agreements quickly," he said.

The company, which is based in Chicago, is the second-largest mall operator in the nation and owns or manages more than 200 malls.

The real estate investment trust and roughly 166 regional shopping centers and subsidiaries filed for Chapter 11 protection in April.

At the time, it reported $27 billion in debt, making it the largest U.S. real estate bankruptcy case in history. The company racked up the heavy debt load in an aggressive expansion during the height of the real estate boom and was unable to service it when credit markets dried up during last year's financial crisis.

The lenders agreed to extend the due dates on the loans to between January 2014 and as far off as 2018. But in return, they will be getting back what they originally were owed, plus interest and other bankruptcy-related costs.

Because the plan calls for General Growth to pay off the loans in full, it will retain the equity in the shopping centers, including Ala Moana Center and the Harborplace & The Gallery in Baltimore.