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Mall REIT Washington Prime Group Files For Chapter 11

Washington Prime Group, which owns about 100 U.S. retail properties, including enclosed malls and strip centers, has filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of Texas. The company says it has obtained $100M in debtor-in-possession financing to fund operations during bankruptcy proceedings.


Columbus, Ohio-based WPG has struck a deal with a majority of its creditors, including the distressed debt investment specialist SVPGlobal, to swap equity for some of its debt claims. The retail landlord will also solicit other offers for its debt.

The company has assets of about $4B and debt of about $3.5B. Its plan calls for deleveraging the WPG balance sheet by roughly $950M, according to a statement by the company. Besides swapping unsecured notes for equity, WPG will make a $190M paydown of its revolving credit and make a $325M equity rights offering backstopped by SVPGlobal.

Washington Prime has been in negotiations with its creditors since last year and didn't make a $23M bond interest payment in February, Bloomberg reports. Four days before missing the February payment, WPG said it would be giving out $11.6M in aggregate bonus payments to 17 executives, provided they remain with the company for 12 months and hit unnamed performance incentives.

A forbearance agreement with creditors has been in force during the negotiations. The company cited the coronavirus pandemic as the prime source of its woes but asserted that it will continue business as usual at its properties during the bankruptcy.

"We have the necessary capital to meet all of our operational obligations as well as continue to transform our assets into dynamic dominant town centers," the company said in a letter to tenants, signed by WPG CEO Louis Conforti and other executives. "... This means that the company will continue to deploy capital for tenant allowances, adaptive reuse projects and common area activations, all of which have differentiated us from our peers."

Investors had been skittish about WPG since well before the pandemic. In late 2016, its shares traded at over $100, followed by a steady decline in value afterward. In January 2020, shares were trading for around $30, which crashed to $5 per share by November. 

Shares have traded for around $2 each much of this year but spiked in recent days to as much as $6.73 on June 9. By Monday, when trading was halted, the REIT's shares were trading for $2.87 each.