Markland Mall owner continues bankruptcy talks following $55M loss

·2 min read

May 14—The owner of Markland Mall has been given a fifth extension to reach an agreement with lenders over a planned Chapter 11 bankruptcy following a dismal financial report released last week.

Bloomberg News reported that Washington Prime Group Inc.'s creditors are having difficulty advancing discussions over the bankruptcy filing due to disagreements on dividing the mall owner's assets, according to people familiar with the talks.

Talk of bankruptcy started in March when the company, which owns around 100 malls in the U.S., skipped a $23.5-million interest payment in February, and was given until March 31 to come up with the money.

That deadline has been extended five times, and is currently set to expire on Wednesday.

The new deadline comes after Washington Prime on Monday reported losing $55 million during the first three months of the year. The company said the loss came primarily from "significant impacts" of the pandemic, including tenets modifying leases and missing payments.

Results for the first quarter also include legal and professional fees of $14.5 million related to the company's ongoing negotiations and discussions to restructure its debt.

Even with the deadline extension, bankruptcy seems to be looming. Washington Prime said "there can be no assurance we will reach an agreement regarding a restructuring in a timely manner," and said Chapter 11 bankruptcy is very much on the table.

Chapter 11 bankruptcy isn't a full liquidation of assets but, in most cases, a reorganization or restructuring of debt with oversight by a court. In most cases, some kind of plan to pay off the debt and continue to operate is established, though that requires approval from both the court and creditors.

The company considers Markland Mall a "Tier 1" property, and the mall currently has no debt, according to the earnings report.

For comparison, five other Tier 1 properties were reclassified as non-core properties during the first quarter, and those malls carry a total mortgage balance of approximately $326 million.

Since 2018, the company has invested millions into Markland Mall to demolish the former Sears store and build space for seven new tenants. Those new spaces are now filled by Aldi, PetSmart, OshKosh B'gosh, Carter's and Prodigy Bar & Grill, Party City and Ross Dress for Less.

Washington Prime officials said the company "expects to continue to provide quality service to its customers without interruption and work with its business partners as usual during the course of these discussions and any potential transaction."

Washington Prime owns 12 properties in Indiana, including shopping areas in Muncie, Indianapolis, Lafayette and Mishawaka and Anderson.

Carson Gerber can be reached at 765-854-6739, or on Twitter @carsongerber1.