"We are extremely pleased to take this important step of filing the plan of reorganization for these debtors," says Thomas Nolan, president and COO of GGP, in a statement. "Our successful completion of agreements in principal with additional mortgage lenders shows our continued progress. We will continue to work with our other secured mortgage lenders and are hopeful that we will reach additional consensual agreements quickly."
The $9.7 billion figure is an increase over the previously stated $8.9 billion of mortgage loans. As GlobeSt.com reported towards the end of November, GGP had reached an agreement with lenders to restructure $8.9 billion of secured mortgage loans, which accounted for 77 properties. According to company officials, the revised figures account for 92 of the 166 properties included in the initial submitted in April.
As reported in November, the restructured loans now have an average maturity of 6.4 years from January 1, 2010. The first loans will mature in January of 2014. For the 70 loans that are part of this deal, the weighted average contract interest rate is 5.35%, while the all-in-interest rate, after amortization of fees paid, is 5.54%.
Those holding secured debt claims in the company must submit their vote or an objection to the plan by 5:00pm on December 11. Court confirmation is scheduled for December 15. Should everything move forward as planned, GGP could emerge from bankruptcy before the year ends.
Fitch Ratings sees the move as a positive sign for the CMBS market, officials say the deal "assuages market concern that the sector would be susceptible to increased losses." After the properties emerge from bankruptcy, they could return to performing loan status within 60 to 90 days.
The successful resolution substantially alleviates the risk of rating downgrades for the transactions and illustrates the effectives of bankruptcy remoteness structures," says Fitch Ratings senior director Adam Fox. "Removing the loans from bankruptcy with their mortgages intact is an important test of the Special Purpose Entity structure, which is a key component in structured finance."
GGP owns or manages 200 properties in 44 states. In April, when the company filed for Chapter 11 bankruptcy protection is was working to refinance parts of $27 billion debt load.
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