General Growth Properties Inc. (GGP), the second-largest retail REIT in the country, completed the financing of $1.2 billion in property-level debt. The new loans have a weighted average interest rate of 3.65 percent and an average term of 8.4 years, compared to the 4.62 percent interest rate on the previous loans, which were due to mature in about a year.
The transactions generated approximately $545 million in net proceeds for the firm.
Properties included in the financings are: Newgate Mall in Ogden, Utah; Fashion Place in Murray, Utah; Town East Mall in Mesquite, Texas; Tucson Mall in Tucson, Ariz.; Visalia Mall in Visalia, Calif.; Coastland Center in Naples, Fla. and Bridgewater Commons in Bridgewater, N.J.
Having completed $7.9 million in financing deals this year, GGP has no property-level debt maturing in 2012. The company has been working hard to reduce its leverage and keep its financials in order after going through Chapter 11 bankruptcy in 2009-2010 as a result of taking on too many loans during the boom years.
Nevertheless, RBC Capital Markets’ analyst Rich Moore noted in a Nov. 5 report that GGP’s leverage level remains “naggingly high,” restraining the company’s acquisition activity. In the third quarter, the REIT’s debt to gross assets ratio stood at 64.1 percent, with total long-term debt of $18.9 billion, in RBC estimates.
“While the majority of high-rate loans that can be prepaid have been refinanced, the company still has $1.3 billion of Rouse bonds that will likely be redeemed by year end 2013,” Moore wrote. “The rate on these bonds is approximately 6.65 percent, which presents the potential for substantial savings.”