GGP Moves Closer to Reorganization; New CMBS Issue in the Works (Wednesday's News & Notes)

General Growth Properties seems intent on exiting Chapter 11 as quickly as possible--today, the REIT released details of further loan extensions and other details on its plans to emerge from bankruptcy. It previously had announced deals covering approximately $8.9 billion in secured mortgages and now has commitments to cover a further $800 million. In all, its plan of reorganization covers loans on 92 properties, which now includes 77 shopping centers, three office buildings, 10 smaller shopping developments and two industrial properties.

Meanwhile, the market for CMBS debt, which has appeared dead for most of this year, is slowly recovering. In November, it saw the issuance of notes backed by shopping centers owned by Developers Diversified Realty. Now, it turns out we may see another major issuance before the year is over.

  • Reuters reports that General Growth Properties has secured more loan extensions and filed a reorganization plan with the bankruptcy court. The Wall Street Journal has more on this story.
  • Canadian REIT RioCan plans to buy four shopping centers totaling 1.2 million square feet, according to Reuters.
  • The CMBS market has also been showing signs of life. About a week after the first major CMBS issuance of the year, backed by properties belonging to shopping center REIT Developers Diversified Realty, J.P. Morgan Chase is getting ready to sell $500 million in CMBS notes backed by centers owned by Inland Western Retail Real Estate Trust, according to The Wall Street Journal.
  • But even with an increase in the availability of new financing, the commercial real estate industry faces some serious debt problems. Another Reuters story reports that defaults on commercial real estate mortgages have reached a 16-year high.
  • Agent Genius tries to make a case that the Internet and the growing trends of telecommuting and online shopping have contributed to the drop in demand for new malls and office buildings.
  • Most people still go to brick-and-mortar stores for everyday necessities like food, however, spurring growth for retailers like 7-Eleven. The Real Deal reports the convenience store operator plans to make a strong push into Manhattan, that will include sites at hospitals and gas stations.
  • Finally, some more bad news for the developers of Block 37 project in Chicago. A preliminary review of the center in The Chicago Tribune deemed Block 37 an architectural "disappointment.
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