The loans were in default before the restructuring, which cost Horizon Group Properties $1.98 million, equal to the amount paid by Amster's and Skoien's group for the two outlet centers. However, the restructuring also wiped out nearly $800,000 in back interest and penalties, and Horizon Group Properties gets a contract to lease and manage the two properties.
If the new owners get more than a 12% annual return on their investment, Horizon Group Properties will get 50% the remaining net profits upon a sale of the centers.
The sales by Horizon Group Properties will result in a $1.9-million second-quarter gain, according to the REIT. "Our center in Tulare continues to thrive, and this restructuring cured the defaults and retains the current favorable financing on that property," says chief financial officer David R. Tinkham in a statement. "We look forward to working with the new owners of Daleville and Somerset to improve the performance of those centers and participating in the net profits from their future sale."
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