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General Growth extends deadline on $900m loans

The US’ second largest mall owner says it has extended the maturity deadline on $900m of loans until February next year. The debt, tied to two Las Vegas properties, had been due for repayment last week.

General Growth Properties, the struggling retail real estate investment trust, has extended the deadline to repay $900 million of overdue loans on two Las Vegas properties.

The REIT said in a statement it had entered into a “forbearance and waiver agreement” over its loans for the Fashion Show and Palazzo retail complexes, which pushed back the maturity date until 12 February, 2009.

The loans had been due last week, with General Growth and its lenders saying last Friday the parties had failed to reach a unanimous agreement. However, after intense negotiations, General Growth said it had been able to extend the debt deadlines after conceding “to certain restrictions and covenants”.

The Fashion Show, located on Las Vegas Strip, is one of the world’s largest enclosed retail centres, with more than 1.8 million square foot of space, 200 stores, seven anchor tenants, a stage and fashion runway, with fashion shows occurring every Friday, Saturday, and Sunday. The Palazzo shopping centre, is part of the stand-alone resort, the Palazzo, being developed by listed developer Las Vegas Sands.

Private equity real estate firms have been eyeing distress in the public real estate sector as potential investment opportunities, as many struggle to refinance loans and face steeply discounted share values.

Earlier this month, General Growth renewed $896 million of mortgage loans coming due over the next five to seven years. The proceeds of the renewals were used to pay off a $58 million bond issued by the Rouse Company. In 2004, General Growth bought Rouse in a deal valued at more than $12.6 billion. General Growth has a debt load of reportedly $27 billion.