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Citigroup Moves to Foreclose On GGP Mall

Update: A Reuters report indicates three more GGP malls may have been turned over to special servicers. It mentions Town East Mall, in Mesquite, Texas, the Southland Mall in Hayward, California, and the Deerbrook Mall in Humble, Texas.

So this really may be it for GGP. Perhaps today's the day we see the Chapter 11 filing.

Citigroup Inc. and other lenders have filed court papers to foreclose on General Growth Properties Inc.'s Oakwood Center mall in New Orleans, which has a $95 million mortgage that came due Monday and wasn't paid.

It was unclear early Friday afternoon what the foreclosure action means for other loans among General Growth's $27 billion in debt. The owner of more than 200 U.S. malls already has more than $1 billion in debt that is past due, though the lenders haven't demanded immediate payment. Another $4 billion could be called due if those lenders so choose. A foreclosure could cause General Growth's lenders to declare a cross default and demand payment of their loans.

The Oakwood foreclosure action comes as General Growth is trying to coax most of its holders of $2.25 billion in bonds into an agreement to abstain from demanding payment of principal and interest on those bonds through the end of this year. Of those bonds, $395 million were due Monday. General Growth set a deadline of 5 p.m. EDT Friday for bondholders to agree to the consent-solicitation pact. If not enough bondholders agree, General Growth could be forced to seek Chapter 11 bankruptcy protection.

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