Institutions Sell $386M of GGP Mall Loans

CHICAGO-A joint venture of two financial groups has sold two loans, with a value of $386.2 million, for three malls owned by struggling local retail REIT General Growth Properties, to an unnamed buyer. The loans are on the 1.2-million-square-foot Fox River Mall in Appleton, WI; the 900,000-square-foot Oaks Mall in Gainesville, FL and the 1.2-million-square-foot Westroads Mall in Omaha, NE.

Holliday Fenoglio Fowler LP represented the venture that sold the two large-balance loans, which had five-year terms at their 2007 origination, and were written on an interest-only basis. Stuart Salins, a senior managing director with HFF, asked that the venture companies remain private, and refused to divulge the name of the buyer.

“The seller timed the market perfectly and sold,” he tells GlobeSt.com. One note was on Fox River, and the other note was held on Oaks and Westroads, he says. The latter two malls were purchased by a JV of GGP and Montreal-based Ivanhoe Inc. in 1997 for $206 million.

Salins also refused to say what the purchase price was of the loans. “The sellers have not authorized us to make any statements about these deals.” Whit Wilcox, also a senior managing director with HFF, refused to speak with GlobeSt.com about the loans, and both the venture partners and a GGP spokesman did not return calls for comment. It’s been reported that the mall REIT, which is scrambling to renew more than $1 billion in loans for its properties as its stock price hovers in the low single-digits, has said that these three malls will stay open regardless of its troubles.

He says his company handles all sorts of loan sales, from underperforming to well-performing, and both types are going better than expected. “The market is very active on distressed and sub-performing loans,” Salins says. “The number of buyers and sellers is huge, and growing every day.”

Salins says the major challenge so far has been the big delta between the bid and ask price–but that’s starting to change, he says. “Sellers have to get these off their books. They’re feeling huge pressure, whether it’s regulatory, TARP, not having enough staff, whatever. They’re motivated to sell at any price,” Salins says. “Even the better-quality loans are selling, for a lot of reasons, such as to generate liquidity, to rebalance a portfolio, or even just to reduce exposure to real estate. Though the universe of buyers is much smaller than higher-risk, it’s still an active market.”