Lindale Mall owner Washington Prime Group files for Chapter 11 bankruptcy

Washington Prime Group, owner of the Lindale Mall in Cedar Rapids, has secured $ 100 million in “debtor in possession of fresh money” financing that will be used in the day-to-day operations of the mall. (Liz Martin / The Gazette)

In a sweeping financial reorganization involving dozens of malls across the country – including Lindale Mall in northeast Cedar Rapids, the only remaining closed mall in the city – owner Washington Prime Group has filed for a bid bankruptcy that allows it to stay in business while it loses some of its nearly $ 3.5 billion debt.

The real estate investment firm filed a Chapter 11 petition Sunday night in Texas and expects its mall operations to continue “uninterrupted” as it reorganizes.

“Throughout the Chapter 11 process, we expect business to continue as usual in our downtown areas, including the Lindale Mall, where our tenants, sponsors and employees will continue to operate normally,” said Washington Prime Group spokeswoman Kim Green said in an email.

Nationwide for the company, rent collections have dried up and tenants have filed for bankruptcy or gone out of business as the COVID-19 pandemic spread in 2020. The Columbus-based company , Ohio, which has about 100 locations, began negotiations with its creditors last year. and skipped a $ 23 million bond interest payment in February. Creditors had extended a forbearance deal as debt talks continued.

The company, with assets estimated at $ 4 billion, has secured a bankruptcy loan of up to $ 100 million to fund its operations during the legal process.

Lou Conforti, chief executive and director of Washington Prime Group, said in a statement that filing for bankruptcy allows the company to “resize its balance sheet and position the company for success in the future.”

In a Chapter 11 filing, a company asks to restructure its debt so that it pays some but not all of the money owed. Chapter 13 deals with the repayment of all debts over an extended period and Chapter 7 deals with closing transactions.

The restructuring comes as interest rates remain relatively low. A 30-year Freddie Mac fixed rate mortgage is at 2.96 percent on average, as of June 10. Around the same time last year, it was at 3.21 percent. Three years ago it was 4.54%.

According to bankruptcy documents, US Bank owes the most money at $ 720.4 million, followed by Bank of America with $ 249.3 million and GLAS USA with $ 85 million. None of the 30 companies that owe them the most money are based in Iowa.

In April 2020, Iowa Governor Kim Reynolds extended previous emergency health orders to include shopping malls, which have been closed for more than a month.

Lindale Mall, built in 1960 at First Avenue NE and Collins Road NE, has weathered the pandemic with most storefronts still in operation. A walk through the mall on Monday showed that more than 80% of the storefronts accessible from inside the mall were occupied.

However, the former Younkers and Sears spaces – major anchors in Lindale that closed before the pandemic – remain vacant. Mall executives said in June 2019 that an undisclosed retailer had signed a letter of intent to move into the Younkers space, but the property remains vacant.

Thirteen of 16 spaces in “outlier” stand-alone buildings, including a Hy-Vee grocery store, are occupied, according to the store directory.

The mall’s appraised property is worth more than $ 45 million, according to records from the Cedar Rapids appraiser’s office.

Washington Prime Group – which also owns another mall in Iowa, the Southern Hills Mall in Sioux City – isn’t the only mall to take this step out of financial distress since the start of the pandemic.

CBL and Associates Properties and Pennsylvania Real Estate Investment Trust both filed for Chapter 11 bankruptcy in November, according to the Wall Street Journal, while other malls have closed permanently during the pandemic.

Across the industry, occupancy rates in shopping centers fell from 88.5 percent in 2020 to 84.4 percent in the first quarter of 2021, according to data from the International Council of Shopping Centers.

Cedar Rapids’ other major mall, downtown Westdale in the southwest of the city, has been made up of exterior-facing storefronts since its redevelopment started in 2013 by Frew Development Group.

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Bloomberg contributed to this report.

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