General Growth Properties Inc. plans to emerge from bankruptcy without selling its best-performing shopping malls after reaching an agreement with lenders, a development that reassured the commercial mortgage-backed securities market.
"I would not be surprised to see the odd sale of an asset, but it won't be to raise substantial capital," General Growth President and Chief Operating Officer Thomas Nolan said Wednesday in a telephone interview. "We have no current plans to sell any of those assets we consider to be strategically important."
General Growth, the second-largest U.S. mall owner, this week filed a reorganization plan for about $9.7 billion of mortgages secured by 92 regional shopping centers, community retail centers and office buildings. Under the plan, all claims would be paid in full, and loan-maturity dates would be extended by an average of 5.2 years.
Before filing for Chapter 11 bankruptcy protection in April, the Chicago company had been trying to sell real estate including Boston's Faneuil Hall, South Street Seaport in New York City, and the Fashion Show and Shoppes at the Palazzo malls in Las Vegas. Those sales won't be necessary under the planned reorganization, Nolan said.
General Growth had surprised holders of commercial mortgage-backed securities when it included nine special-purpose entity borrowers owning 166 securitized properties in its bankruptcy filing.
"The successful resolution substantially alleviates the risk of rating downgrades for the transactions," with the loans being paid in full, Adam Fox, a senior director with Fitch Inc. in New York, wrote in a note to investors Wednesday.