A major mall owner is preparing for bankruptcy after it failed to make an interest payment on its debt.
Washington Prime Group, a real estate investment trust which owns more than 100 malls, has been negotiating with its lender to reduce its debt — but the talks are not going well, Bloomberg News reported. The mall owner has said Covid-19 could impair its ability to repay debt going forward or threaten its ability to stay afloat.
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In November, Lou Conforti, the mall REIT’s chief executive officer, had said filing for bankruptcy was off the table.
But a month later, the mall had a setback. It sought to convert about $260 million in unsecured bonds to $175 million of preferred equity, but was unable to after it failed to reach an agreement with debt holders.
Washington Prime reported that its rent collections fell to 52 percent in the second quarter of 2020, although by the third quarter, collections had risen to 87 percent.
Two of the Ohio-based REIT’s competitors, CBL & Associates Properties and Pennsylvania Real Estate Investment Trust, filed for bankruptcy last year.
Malls have struggled during the pandemic as shoppers have stayed either because they felt safer shopping online or because indoor shopping was suspended to stop the spread of the coronavirus.
[Bloomberg News] — Georgia Kromrei