THE OWNER OF 104 SHOPPING CENTERS FROM THE USA FILES FOR BANKRUPTCY

The American investment company Washington Prime Group (WPG), which owns real estate in 104 shopping centers of the US (mainly in the area of Chicago) has applied to the court for bankruptcy protection. The company cited the COVID-19 pandemic as a major contributor to its financial distress.

In accordance with Chapter 11 of the US bankruptcy code, WPG plans to reduce its debt to creditors, as well as restructure them, while continuing to operate in the commercial real estate market.

An application to the court was filed last Sunday. In its text, the company announced that $ 100 million was received to finance the upcoming legal procedures. This, according to representatives of the company, will allow it to develop its business without suspension of operation of the shopping centers. WPG CEO Lou Conforti said that during the upcoming restructuring, the company would continue its activities aimed at maximizing the value of its own assets and the entire infrastructure.

However, the exchanges that opened on June 14 reacted to the company's announcement in a completely different direction.

The company’s share price fell by almost a third.

WPG's share price has been falling before that, having started in the fall of 2016, but once the value of one share reached $ 124.65.

Experts note that the situation with the possible bankruptcy of WPG is similar to the problems of other American companies, which have declared the impossibility of paying off their debts. In particular, similar applications were filed in November by CBL Properties and PREIT (Pennsylvania Real Estate Investment Trust), both of which have 130 shopping centers in various North American states.

Market analysts in the United States believe that the problem of bankruptcy of operators of shopping centers is complex. Their revenues are plummeting as retailers are unable to pay the rent.

They either leave the market or file for bankruptcy.

This is exactly what many tenants have done during the past year, including the well-known brands Brooks Brothers, J. Crew, Pier 1, Aldo and GNC. Amid the pandemic, the number of Americans choosing to shop online has markedly increased. At the same time, WPG announced financial losses in the amount of $ 219 million.

WPG has been around since May 2014. Then the company separated from the SPG holding (Simon Property Group), having the rights to 5 million square meters of usable retail space. Last year, its revenues from leased premises of the shopping center decreased to $ 506.7 million. In comparison with 2019, the company missed $ 126.9 million.