General Growth continues refinancing malls

Shopping-center owner General Growth Properties Inc. has begun the process of confirming Chapter 11 plans for two malls in Las Vegas by restructuring $896 million in mortgage loans. The hearing for approval of disclosure materials on the two malls will be held in Manhattan bankruptcy court tomorrow.

In unrelated developments, General Electric Capital Corp. and Fidelity Fixed Income Trust are no longer on the official creditors' committee. Nine committee members remain.

General Growth reached agreement with lenders to restructure the $646 million mortgage on the Fashion Show Mall and the $250 million mortgage on Shoppes at Palazzo, both in Las Vegas.

The revised loans will carry interest 3 percentage points higher than the London interbank offered rate, compared with 0.75 percentage point above Libor for the existing loans. The prior loans had fixed rates, while the new loans will have floating rates.

Simon Property Group Inc. said it's in talks with Blackstone Group LP about joining its group to provide financing for General Growth to confirm a reorganization plan.

General Growth is scheduled for a hearing on May 5 for the bankruptcy judge in New York to approve a process for selecting investors to provide equity and debt financing required for implementing a Chapter 11 plan for the holding company.

General Growth so far has confirmed Chapter 11 plans covering $13.8 billion in 105 loans at subsidiaries owning 141 properties. Plan were consummated for 106 properties with $12 billion in debt.

General Growth began the largest real-estate reorganization in history by filing under Chapter 11 last April. The books of Chicago-based General Growth had assets of $29.6 billion and total liabilities of $27.3 billion as of Dec. 31, 2008. The company owns or manages more than 200 shopping-mall properties.

The case is In re General Growth Properties Inc., 09-11977, U.S. Bankruptcy Court, Southern District of New York (Manhattan).