06/18/2010

TIAA May Refi Securitized Loan on GGP Mall

TIAA-CREF, which holds as much as $89 million of subordinate debt on a suburban Seattle mall owned by a General Growth Properties partnership, is thinking about refinancing the property's $196.9 million securitized mortgage to protect its investment.

General Growth and its partner, New York Common Fund, face a deadline next month to pay off close to $300 million of debt on Alderwood Mall in Lynwood, Wash. If the duo cannot refinance the securitized mortgage, TIAA might step in to provide fresh financing as part of a reworking of the debt package, market players said.

TIAA declined to comment specifically on the property, but said in a statement: "We are discussing strategies to manage our existing mortgage loan maturities, including loan extensions and refinances of loans with attractive credit characteristics."

The original debt package, arranged by Morgan Stanley in 2005, consisted of a $210.8 million senior loan, a $54.4 million B-note and a $35 million mezzanine loan. Morgan Stanley securitized the 4.7% senior loan, whose balance has since amortized to $196.9 million, and placed the B-note and the mezzanine loan with TIAA. It's unclear if the subordinate debt has amortized.

The mall was built in 1979 and renovated most recently in 2004. While the property encompasses 1.3 million square feet, the debt is backed by only 565,000 sf. The anchor stores - Macy's, Sears, JC Penney and Nordstrom - aren't part of the collateral. The mall's occupancy rate was 95% at the end of last year.

General Growth, a Chicago REIT, has owned the mall in partnership with the New York pension system since 1999. Alderwood Mall was excluded from General Growth's bankruptcy filing in 2008.

The senior mortgage was put on a servicer watch list last year. Although the property was throwing off more than double the net operating income needed to cover debt service, the servicer was concerned that the General Growth partnership would have difficulty refinancing.

The senior loan was securitized via two deals: A $103.3 million portion was included in the $1.7 billion Bear Stearns Commercial Mortgage Securities Trust, 2006-TOP22; and the remaining $107.5 million piece was included in the $1.4 billion Morgan Stanley Capital I Trust, 2006-TOP21.

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