Mall REIT Washington Prime Group on Thursday said that it and its debtor affiliates have emerged from Chapter 11, having reduced its debt by almost $1 billion, thanks in part to debt forgiveness that positions investment firm SVPGlobal as majority owner.
The company's financial restructuring is complete and its reorganization plan, confirmed Sept. 3 by the U.S. Bankruptcy Court for the Southern District of Texas, is in place, according to a press release. Washington Prime Group filed for bankruptcy in June.
Lou Conforti is stepping down as chief executive officer, the company also said. Chief Financial Officer Mark Yale and Head of Leasing Josh Lindimore, will serve in the interim as co-CEOs. In addition, Sujan Patel, Jeff Johnson and Martin Reid have been named to the board.
It's been rough going for Washington Prime Group during its Chapter 11 process, and now it will proceed as a private entity majority owned by the investment firm that forgave a copious amount of debt.
The mall company last month threw in the towel in the open market, choosing to voluntary delist from the New York Stock Exchange, announcing that staying wasn't worth the expense. In August, the REIT also failed to garner bids on properties put up for a bankruptcy auction.
In going private, the REIT joins Brookfield Property Partners, which struck a deal in April to be fully acquired by Brookfield Asset Management for $6.5 billion. But it joins several mall companies in facing a host of uncertainties, despite some easing of the pandemic.
There's no doubt that consumers are heading back to physical stores, including to those at malls, thanks to widespread immunization against COVID-19. But mall companies, even financially healthy ones like Simon Property Group, continue to make concessions that are upending what traditionally was a financially dependable setup. The CEOs of several mall REITs, as they reported their second quarter earnings, said they are agreeing to more volatile terms, like greater amounts of rent based on percentage of sales, shorter leases and non-retail tenancies with unproven traffic and sales benefits.
That upheaval is apparently catnip to SVPGlobal, which earlier this month said it is expanding its real estate team.
"The current break in the real estate market is presenting SVPGlobal with compelling investment opportunities," SVPGlobal founder and Chief Investment Officer Victor Khosla said in a statement.