Washington Prime mall owner reportedly preparing to file for bankruptcy

Louis Conforti, CEO of Washington Prime Group, on CNBC’s Mad Money.

Source: CNBC

US mall owner Washington Prime Group gears up to potentially file for Chapter 11 bankruptcy as time is running out before the company defaults after ignoring interest payments on its debt, Bloomberg reported Thursday.

Washington Prime last month missed an interest payment of $ 23 million and said it would enter a 30-day grace period to continue negotiations with lenders.

But those talks have since failed, Bloomberg reported, citing conversations with people familiar with the matter. Still, the bankruptcy lawsuit plan could change, Bloomberg said, if Washington Prime is able to make progress with its lenders or if its grace period is extended.

A company spokesperson declined to comment on the report.

The Columbus, Ohio-based real estate investment trust was formed in May 2014 following a spin-off from America’s largest mall owner, Simon Property Group. It continued to develop its portfolio of shopping centers when it acquired Glimcher Realty Trust in January 2015.

Washington Prime currently operates around 100 shopping malls across the country, a number of which are considered Class B and C, meaning they generate less sales per square foot than a Class A asset. These properties have suffered further. more pressure during the Covid pandemic, with fewer people venturing out of the house to shop. When they do, they probably opt for outdoor malls rather than closed malls.

And with a number of retail, restaurant and entertainment tenants asking for rent cuts or more locations to close, mall owners have struggled to meet their own obligations. This stress has already pushed some to the brink and out of business.

Last November, two other mall owners, CBL and Pennsylvania Real Estate Investment Trust, filed for Chapter 11 bankruptcy. The latter has since emerged.

Washington Prime shares fell more than 45% on Thursday at noon. The title is down over 80% from a year ago. Washington Prime has a market capitalization of approximately $ 71 million.

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