As Washington Prime Group mall owner rolls out of bankruptcy, no one knows what it’s worth


When Washington Prime Group went bankrupt in June, the mall operator’s bankruptcy judge was almost certain the case would end in a table valuation brawl.

So it was a surprise when U.S. bankruptcy judge Marvin Isgur approved the real estate investment trust’s Chapter 11 exit plan on Friday, September 3, with no creditor looking at future cash flows, the piecemeal asset sales or competing deals. Its approval means investment firm SVPGlobal will swap its debt for ownership of the company, and shareholders will even see a recovery, although no one really knows what Washington Prime is worth.

Columbus-based Washington Prime has a portfolio of some 100 malls across the United States, with a mix of fully enclosed malls and open-air malls. The company’s website says it owns nine malls in Ohio, including Great Lakes Mall in Mentor and Southern Park Mall in Youngstown.

The varied bag of brick and mortar retail assets mixed with the uncertainty of a global pandemic has created a difficult, if not impossible, task for valuation experts.

“Do you think anyone has confidence in the assessment? Isgur asked an attorney for Washington Prime shareholders on Friday.

“I don’t think anyone really knows that, and the market will tell us soon enough,” Brown Rudnick lawyer Robert Stark replied.

Rather than forcing Isgur to rule on what might be a reasonable assessment – a process that would likely be long, costly, and inherently uncertain – lawyers for Washington Prime and its stakeholders settled their differences ahead of Friday’s hearing. . A handful of remaining objections were resolved during the scheduled hearing period.

While ruling on Washington Prime’s plan, Isgur noted that while no one knows what the mall owner is really worth, the deal leaves creditors better off than the alternative – liquidation. It is the only valuation test required by US bankruptcy rules, he said.

A liquidation of the REIT could have raised up to $ 2.4 billion for distribution to creditors, according to an estimate provided in court documents. Washington Prime went bankrupt with over $ 3 billion in debt.

“I suspect no matter how many conversations you’ve had, no one will ever know what the real value is,” Isgur said during the hearing.

The case is Washington Prime Group Inc., 21-31948, US Bankruptcy Court for the Southern District of Texas (Houston).


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