PROVIDENCE – The owner of Providence Place received a $375 million loan on the mall as part of a plan to refinance $5 billion of its mortgage debt.
General Growth Properties Inc. has tapped UBS to provide the loan on the 977,000- square-foot mall in the capital city, according to a person with direct knowledge of the deal who declined to be identified because the talks are private.
Rhode Island's Market Has Changed. Developers, Builders, Investors and Sellers Must Change With It.
By Emilio DiSpirito IV License Partner | Engel & Völkers Oceanside Leader | The DiSpirito…
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Morgan Stanley will lend about $150 million for a Humble, Texas property, according to a person familiar with those negotiations. The banks plan to package the loans for sale as securities, the people said.
General Growth, which emerged from the largest real estate bankruptcy in U.S. history in November after piling up $27 billion in debt, plans to refinance $5 billion in mortgages in 2011, Chief Executive Officer Sandeep Mathrani said during a March 1 conference call with analysts. Property owners nationwide are benefiting as the Federal Reserve keeps its benchmark interest rates near-zero to stimulate economic growth.
“We’ve embarked upon a significant mortgage refinancing plan,” Mathrani said during the call. “An environment of low interest rates allows us to achieve more favorable terms than we had imagined before.”
Shopping Six Loans
The loans arranged through Morgan Stanley and UBS are two of six the Chicago-based mall operator is shopping to lenders, the people said.
Kelly Smith, a New York-based spokeswoman for UBS, declined to comment as did Mary Claire Delaney, spokeswoman for New York- based Morgan Stanley.
General Growth buckled under its debt load when the market for commercial-mortgage backed bonds shut down in 2008 and the company was unable to refinance properties. The real estate investment trust has $18.2 billion in outstanding mortgage debt, Mathrani said.
“We’re pleased with the quality of the bidding field and support we have received from the lending community,” David Keating, a spokesman for General Growth, said in an e-mailed statement. “The large-loan market is quite strong, which is encouraging as we opportunistically seek to extend term and enhance our financial flexibility.”
Wall Street banks are competing to fund commercial real estate loans as property prices recover and investor demand surges for bonds tied to the properties. Banks have arranged about $6.5 billion in commercial mortgage-backed securities this year, compared with $11.5 billion in all of 2010, according to data compiled by Bloomberg.
Sales may rise to $45 billion this year, according to JPMorgan Chase & Co. They plummeted to $3.4 billion in 2009 as credit markets seized. The market peaked with $234 billion in CMBS sales in 2007, Bloomberg data show.
