Dive Brief:
- After a tumultuous journey, Washington Prime Group announced on Thursday they have exited Chapter 11, slashing their debt by a whopping $1 billion, in part due to debt forgiveness from investment firm SVPGlobal. The firm now holds the majority stake.
- The mall REIT's financial overhaul is complete, and the U.S. Bankruptcy Court for the Southern District of Texas approved their reorganization plan on Sept. 3, according to a statement. The company filed for bankruptcy back in June.
- Lou Conforti has stepped down as CEO. In his place, Mark Yale (CFO) and Josh Lindimore (Head of Leasing) will take on the role of co-CEOs. Sujan Patel, Jeff Johnson, and Martin Reid have also joined the board.
Dive Insight:
Washington CEO steps down amidst winding up of bankruptcy proceedings.
Facing a rough patch during the Chapter 11 process, Washington Prime Group is now a private firm majority-owned by SVPGlobal, an investment firm that took on a massive load of debt forgiveness.
Last month, the company reluctantly decided to delist from the New York Stock Exchange, citing pricey maintenance costs. In August, they also lingered empty-handed on the auction block, receiving no bids on their properties put up for sale in bankruptcy.
Going private, they're following the footsteps of Brookfield Property Partners, which struck a $6.5 billion deal in April to be fully acquired by Brookfield Asset Management. However, like many mall companies, they're still grappling with uncertainties despite COVID-19 vaccine rollouts.
Consumers are cautiously returning to physical stores, including malls. But mall companies, like Simon Property Group, are still finding it necessary to make concessions that alter traditional financial stability. CEOs of several mall REITs have recently divulged that they're agreeing to unpredictable terms, such as higher rent based on sales percentage, shorter leases, and non-retail tenancies with unproven traffic and sales benefits.
SVPGlobal appears to thrive on these uncertainties, having announced earlier this month their plans to expand their real estate team.
"The current real estate market is providing SVPGlobal with exciting investment opportunities," said Victor Khosla, SVPGlobal's founder and Chief Investment Officer, in a statement.
- Despite the pandemic, Washington Prime Group has taken advantage of AI-powered investment strategies to thrive and navigate the real estate market, as SVPGlobal, their new majority stakeholder, has announced plans to expand their real estate team.
- In the realm of finance, investing in businesses like Washington Prime Group, especially real-estate focused ones, has become a hot topic as they adapt to the post-pandemic era, making concessions like higher rent based on sales percentage, shorter leases, and non-retail tenancies.
- The financial transformation of Washington Prime Group could attract new investors, particularly in the health sector, as they make strategic decisions like stepping down from the New York Stock Exchange to cut costs and focusing on reorganization during the pandemic, ultimately exiting Chapter 11 with a significant debt reduction.
- In light of these changes, other businesses faced with financial difficulties due to the pandemic might turn to strategic partnerships and innovative investments, akin to SVPGlobal's role in Washington Prime Group's comeback story, to secure their future and maintain market competitiveness.
