Seems Like Old Times: GGP Taps 5 CMBS Shops
General Growth Properties has awarded $1.1 billion of fixed-rate mall mortgages to five securitization shops.
The move is reminiscent of pre-crash days, when General Growth, the nation's second-biggest owner and operator of malls, was a mainstay borrower in the commercial MBS market. The Chicago REIT obtained 99 CMBS loans totaling more than $9 billion from 2004 to 2007, according to Realpoint.
The new assignments were won by UBS, Goldman Sachs, Morgan Stanley, Wells Fargo and Deutsche Bank. Separately, General Growth is close to awarding a mortgage of about $250 million on a Texas mall to an insurance company.
Market players said General Growth likely chose to divvy up the assignments among so many lenders, instead of awarding them to one or two, to help rebuild good working relationships with multiple active lenders — a strategy the REIT used in earlier days to good effect. “General Growth always chose to spread the money around,” said one observer. “It gives them added clout in the market.”
The REIT, which emerged from bankruptcy late last year, began to hunt for the mortgages in recent weeks. It will use the proceeds to refinance existing debt on six malls scattered from California to Rhode Island. All six were leveraged up with CMBS debt before the downturn. Lenders said the amount of some of the assignments may change because lenders had proposed varying options on size, rate and other terms to General Growth.
The five securitization assignments went to:
UBS, which will provide a $375 million loan on the 1.3 million-square-foot Providence Place mall in Providence, R.I.
Goldman, which will write a $200 million loan on the 1 million-sf Park Place Mall in Tucson, Ariz.
Morgan Stanley, which will originate a $200 million mortgage on the 1.2 million-sf Deerbrook Mall in Humble, Texas.
Wells, which will supply a $180 million mortgage on the 1.4 million-sf Northridge Fashion Center in Northridge, Calif.
Deutsche, which will lend about $175 million on the 1.5 million-sf Willowbrook Mall in Houston.
General Growth is also close to awarding a loan of about $250 million on the 1.3 million-sf Woodlands Mall in The Woodlands, Texas. General Growth wants a 12-year loan on that property, making it the assignment more suitable for an insurance company. The buzz is that the REIT is close to finalizing a commitment.
CORRECTION (2/22/13): This article has been corrected. The original version gave an incorrect location for Willowbrook Mall in Houston.