Finance  ·  CMBS

Retail Trust WPG Closes $1B CMBS Refi After Bankruptcy

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Retail trust Washington Prime Group (WPG) is back two years after emerging from bankruptcy, as consumers return to in-person shopping.

The Ohio-based trust, which specializes in shopping centers, has closed on a $1 billion commercial mortgage-backed securities (CMBS) loan to refinance its 8.5 million-square-foot portfolio, two years after filing for bankruptcy in 2021 and restructuring its debt. The loan is backed by a portfolio featuring 38 open-air shopping centers across 15 states, mostly in the Midwest and Sunbelt, according to a Morningstar credit rating report

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Goldman Sachs (GS) is acting as both an administrator and lender, while Citi Real Estate Funding and JPMorgan Chase (JPM) are also backers, per Costar, which reported on the financing’s imminent closure. The debt is structured with $210 million as WPG’s cash-in equity.

The recapitalization reflects the recovery of brick-and-mortar retail from the depth of the pandemic when shoppers remained home. This year, the net operating income from Washington Prime Group’s properties is 4 percent higher than it was during the same period in 2019, per the report. 

One of WPG’s shopping centers was the Royal Eagle Plaza in Coral Springs, which was refinanced with $41.8 million, according to Broward County mortgage documents. According to WPG’s website, the 178,714-square-foot mall, which was completed in 1989, boasts 2.1 million annual visitors, who, on average, return nearly five times a year.

Across the entire portfolio, the largest tenant is Best Buy, which accounts for 4.6 percent of the rentable space and 4 percent of total rent. Altogether, the portfolio holds 654 tenants, including other big-box names such as Walmart, Target, Whole Foods, Trader Joe’s, Aldi, Walgreens, BJ’s Wholesale Club, Winn-Dixie and Giant Foods.

WPG’s retail portfolio struggled when COVID-19 spread across the country. In June 2021, the trust filed for Chapter 11 bankruptcy, but just five months later it emerged from the proceedings, having reorganized and recapitalized. The trust eventually rebranded to WPG.

The firm invested nearly $184 million in 2022 and another $10 million this year in renovating its properties. A representative for WPG did not respond to a request for comment.

Julia Echikson can be reached at jechikson@commercialobserver.com