Category: Articles

The news just keeps getting better and better….

Here is the applicable wording:

The two Northwestern Debtors are essentially single asset real estate entities. The formulation of a plan for these two cases should not be complicated or overly time consuming. Presumably the Debtors will desire to extend the maturities of existing loans and/or work out a consensual rate of interest with respect to the loans following their current maturity. As long as the parties negotiate in good faith and do not “drag their feet” this process should take no longer than 45 to 60 days, assuming the parties can come to an agreement. While Northwestern is not committing to any agreement with the Northwestern Debtors, Northwestern stands ready and willing to enter into negotiations in order to move the process along.

Here is the full filing:
Northwestern GGP

For more explanation, please refer to this previous post from this morning.

Disclosure (“none” means no position):Long GGWPQ

They clearly cannot speak for other lenders but there is a clear trend emerging here….

Here is the very interesting disclosure:

The 2008 Facility Borrowers are, in the aggregate, cash flow positive by a significant amount after debt service and operating expenses (including agreed management fees payable to other Debtors and affiliates). On information and belief, the same is true of most of the SPE Debtors. In all of these cases, the mortgage loan will be renegotiated and the remaining creditors will be paid in full.

Full filing:
SPE GGP

Now this is far from a victory lap. A lender “willing to negotiate” a simple one year extension at a hefty interest rate really does not do anything for the cause. A minimum of three years is needed and five would be preferable. BUT, it is good to see that for the most part, heals are not being dug in and lender recognize owning the properties is not in their best interest AND there is no market to liquidate them. That only leave maturity renogotiation.

See posts on other lender willing to extend maturities….here and here

Disclosure (“none” means no position):Long GGWPQ

This is simply wonderful news for shareholders of General Growth Properties (GGWPQ) for a slew of reasons. First, the filing:

Prudential GGP

Again for those not inclined to read the whole document here is the applicable quote:

Prudential reaffirms that it is ready and willing to take concrete steps to reach understandings with Harbor Place, 1160/1180, and Rivertown Crossing with
respect to plan treatment and reiterates that the primary issues to be resolved – extension of maturities and establishment of new market interest rates

Since April I have tried to make the case here that the best scenario for all in this case was a cram down (the extension of debt at new interest rates) and that by doing the Chapter 11 that way, all parties are made as whole as possible.

This agreement by Prudential, should it come to fruition is just that AND gives us a road map for the remainder of the process, should the Judge see fit to go that way with it. It also now put pressure on other lender to follow suit lest they then worry about perhaps receiving an inferior deal down the road as the process unwinds.

What Prudential is seeking in the filing is to simply “get it done now” and understandably General Growth wants to extend the process in order to perhaps (this is my opinion here) come to similar agreements with other lenders. It is also possible that General Growth feels they may be able to obtain a better interest rate in Chapter 11 through a cram down (typically LIBOR + 1%-3%) than what Prudential is offering. None of this has been disclosed but Prudential’s request for a “market rate” interest rate I think may be the sticking point as the original loans were probably well below what a “market rate” would be in the current environment.

Either way, this is a huge move by a lender and the exact scenario I hope to see unfold on a much larger scale as this process moves forward…

Disclosure (“none” means no position):Long GGWPQ