General Growth agrees $9.7bn reorganisation plan

The US REIT, which filed for bankruptcy protection in April, has reached agreement to extend loans covering $9.7bn of its secured debt. Confirmation of the plan is scheduled for 15 December.

General Growth Properties has reached agreement to reorganise $9.7 billion of debt secured against its shopping centres, offices and other real estate assets, the firm has said.

The US real estate investment trust, which filed for Chapter 11 bankruptcy protection in April, said last month it had agreed with lenders to restructure $8.9 billion of mortgage loans.

Today, however, the REIT said in a statement it had been able to reach agreement on a further $800 million of loans. GGP will now ask a judge to approve the plan to repay loans on 92 properties, including 77 shopping centers, three office buildings, 10 smaller shopping developments and two industrial properties.

Each of the entities involved in the loans will have to approve the agreements, and US bankruptcy court Judge Allan Gropper gave the green light for the documents to be sent to those creditors, Reuters cited court papers as showing.

GGP said the reorganization plan is set to be confirmed at a 15 December hearing in New York. If the plan is approved, the entities associated with the properties “will emerge from bankruptcy prior to the end of 2009”, GGP said.

GGP, the US’ second largest mall owner, has the exclusive right to come up with its own reorganisation plan until late February, Reuters added. The company is continuing to negotiate with holders of the remaining $5.2 billion of its $14.9 billion in property debt that was included its 16 April bankruptcy. GGP has another roughly $7 billion in unsecured corporate debt.

Thomas Nolan Jr., president and chief operating officer of GGP, said the news today was an important step forward for the REIT adding: “We will continue to work with our other secured mortgage lenders and are hopeful that we will reach additional consensual agreements quickly.”