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CHICAGO — Chicago-based General Growth Properties (GGP) has reached a preliminary agreement to restructure approximately $9.7 billion in secured mortgage loans related to 92 regional shopping centers that will help the REIT emerge from bankruptcy. Provisions of the agreement include maturity date extensions and a continuation of interest at the current non-default rate. Of the loans covered by this agreement, the average loan maturation date is no sooner than 2016 and the weighted average contract interest rate is 5.35 percent. The all-in interest rate after amortization of fees paid in connection with the loans is 5.54 percent. The agreement is subject to approval by the Bankruptcy Court of the Southern District of New York as well as GGP's creditors. The REIT hopes to emerge from bankruptcy by the end of 2009.

In a statement, Thomas Nolan, Jr., president and COO of GGP, said, “We are extremely pleased to reach this consensual agreement with lenders representing more than half of the mortgage debt covered by the bankruptcy proceedings. We believe that these agreements provide a basis for consensually completing a restructuring of the debtors' remaining approximately $6 billion of secured mortgage loans, and we are hopeful that our other secured mortgage lenders will work with us to reach agreements quickly.”

In April, GGP filed for Chapter 11 bankruptcy protection on behalf of approximately 166 of its shopping centers and six office properties. The company currently owns or manages more than 200 regional shopping centers in 44 states totaling approximately 200 million square feet of retail space. Prior to its bankruptcy filing, it was the second largest shopping center owner in the country.

— Coleman Wood

*UPDATE: 12/2 – The loan amount being restructured was changed from $8.9 billion to $9.7 billion to reflect additional loan restructuring agreements reached between GGP and its creditors.

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