01/06/2012

GGP Seeks $1.3 Billion Loan on Hawaii Mall

General Growth Properties is shopping for a massive $1.3 billion mortgage on one of the country’s top-performing malls: Ala Moana Center in Honolulu.

The assignment will most likely go to a commercial MBS shop, with the winner securitizing it via a stand-alone offering. But portfolio lenders are also kicking the tires. While the loan is too big for any single balance-sheet lender to take down, a few might try to team up on a “club” deal.

General Growth has hired Eastdil Secured to market the assignment. That’s a break from the Chicago REIT’s customary tactic of approaching lenders directly.

The company frequently tapped the CMBS market for financing during the sector’s go-go years. It lined up 99 CMBS mortgages totaling $9 billion from 2004 to 2007 — including Ala Moana Center’s existing fixed-rate loan, which has a current balance of $1.3 billion. That mortgage was originally slated to expire four months ago, but the maturity date was extended to 2018 as part of General Growth’s emergence from bankruptcy two years ago.

The rate on the existing debt is 5.6%. General Growth presumably is moving to refinance now because it can get a lower rate.

General Growth has reported that in-line sales at Ala Moana Center average a sky-high $1,100 per square foot. The 2.1 million-sf property produced $91.5 million of net operating income last year. Based on a 5% capitalization rate, the mall would be worth about $1.8 billion at that income level.

The occupancy rate is 98%. Macy’s, Neiman Marcus, Nordstrom and Sears are the anchors.

The four-level mall, which was built in 1959 and later expanded or renovated six times, is between the Honolulu airport and Waikiki Beach on Ala Moana Boulevard.

The existing mortgage had an original balance of $1.5 billion, consisting of a $1.2 billion senior portion and $300 million of B-notes. LaSalle Bank originated the loan in 2006 and promptly sold a large chunk to Citigroup. LaSalle and Citi securitized all of the senior portion and much of the B-notes via six CMBS deals in 2006 and 2007.

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