Washington Prime Group, A Shopping Mall REIT, Declares Chapter 11 Bankruptcy

Washington Prime Group Inc. WPG, a real estate investment trust focused on enclosed malls and strip center retail properties, has filed for Chapter 11 bankruptcy.

What Happened: The Columbus, Ohio-based company announced its filing in the U.S. Bankruptcy Court for the Southern District of Texas on Sunday.

In a press statement, the company said it agreed to enter Chapter 11 “after executing a restructuring support agreement with creditors, led by SVPGlobal, that hold approximately 73% of the principal amount outstanding of the Company’s secured corporate debt and 67% of the principal amount outstanding of the company’s unsecured notes.”

Washington Prime Group stated it “secured $100 million in new money debtor-in-possession financing from the consenting creditors to support day-to-day operations during the Chapter 11 process,” adding that its business operations will not be disrupted.

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Why It Happened: In announcing its bankruptcy filing, the company blamed the tumult created by the COVID-19 pandemic for creating “significant challenges.” Enclosed shopping malls were particularly hard hit during the pandemic, with many properties closed for months and retail tenants either going out of business or having difficulty making rent payments.

Washington Prime Group has assets estimated at $4 billion and a debt of almost $3.5 billion. It deferred on a $23.2 million bond interest payment in February and entered into forbearance agreements with several lenders in March. In its Q1 earnings report, the company acknowledged a net loss of $55.4 million, compared to net income of $3.4 million one year earlier.

CEO Lou Conforti said the bankruptcy filing will enable the company to “right size its balance sheet and position the company for success going forward.”

At last check, the company’s stock was trading down 43% at $2.84, far from its 52-week high of $16.55 and closer to its 52-week low of $1.69.

(Illustration by Markus Winkler / Pixabay.)

Posted In: Chapter 11 BankruptcyCovid-19Pandemicshopping mallsNewsPenny StocksREITLegalReal Estate

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