Unique: Washington Prime to file chapter as quickly as this week
By Mike Spector
NEW YORK (Reuters) – Mall proprietor Washington Prime Group (NYSE:) Inc is getting ready to hunt chapter safety as quickly as this week after the COVID-19 pandemic pressured it to briefly shut a few of its roughly 100 purchasing facilities throughout america and companies have been unable to pay it hire, individuals aware of the matter mentioned.
The Columbus, Ohio-based firm, fashioned in 2014 following a spin-off from mall big Simon Property Group Inc (NYSE:), owns properties that embody open-air city facilities and enclosed malls, with roughly a 3rd concentrated within the Midwest. Its tenants embody brand-name retailers pushed to the brink by the pandemic, comparable to J.C. Penney Co Inc, which filed for chapter final 12 months. Different tenants embody retailers that borrowed cash final 12 months to bolster their funds throughout the disaster comparable to Mattress Tub & Past Inc (NASDAQ:) and Macy’s Inc. (NYSE:)
The actual property funding belief’s consideration of a Chapter 11 courtroom restructuring to transform roughly $4 billion of debt marks the most recent firm within the broader retail panorama to wilt below a world public well being disaster that saved U.S. buyers dwelling for months on finish.
The U.S. financial system is now sharply rebounding with greater than 140 million People totally vaccinated and companies reopening. However, earlier authorities stay-at-home orders and enterprise closures designed to sluggish the pandemic crushed many retailers’ backside traces, imperiling their skill to pay hire to landlords comparable to Washington Prime. Different mall homeowners comparable to CBL & Associates Properties Inc and Pennsylvania Actual Property Funding (NYSE:) Belief filed for chapter final 12 months.
Washington Prime didn’t instantly reply to a request for remark.
The corporate might be put up on the market in live performance with the anticipated chapter submitting, one of many sources mentioned. It’s in talks for roughly $100 million of so-called debtor-in-possession financing to help operations throughout chapter proceedings, the supply mentioned.
The scale of the financing will rely on whether or not Washington Prime reaches a debt restructuring take care of collectors earlier than submitting for chapter or must proceed negotiations whereas navigating courtroom proceedings, during which case it might method $150 million, the supply added.
Washington Prime has mentioned in public filings that it’s in talks with collectors to restructure its funds and would possibly want to hunt chapter safety.
The corporate has not but made a last choice on whether or not it is going to search chapter safety, among the sources mentioned. The timing of any chapter submitting, ought to one happen, might slip relying on the progress of ongoing talks with collectors, these sources mentioned.
Washington Prime is at the moment working below a forbearance settlement with bondholders and lenders that expires Monday (NASDAQ:) night time. The settlement has been prolonged a number of occasions since Washington Prime skipped a $23.2 million curiosity fee on bonds due Feb. 15.
The discussions have dragged on as negotiators wrestle with Washington Prime’s improved enterprise prospects and the potential that collectors would possibly notice higher monetary recoveries, the sources aware of the proceedings mentioned. Washington Prime’s inventory soared earlier this 12 months earlier than falling, and skilled one other temporary surge in early June.
The talks embody funding agency SVPGlobal, amongst Washington Prime’s largest collectors, the sources mentioned.
SVPGlobal declined to remark.
Fallout from the pandemic final 12 months pressured Washington Prime to shut some properties for a time and chill out assortment of hire from its tenants, squeezing the mall proprietor’s funds. In the course of the throes of the pandemic in 2020, Washington Prime’s rental revenue plummeted about $127 million from 2019 ranges as a result of pandemic.
In the course of the first three months of this 12 months, Washington Prime’s rental revenue was off roughly $20 million in contrast with the identical time interval in 2020. Its money flows from operations for the three months ending in March have been $3.3 million, a plunge from $10 million throughout the identical time interval in 2020.