General Growth Properties (GGP) filed for Chapter 11 bankruptcy protection earlier today.
According to a report from Bank of America/Merrill Lynch, the filing should not come as a surprise to CMBS market participants. The real estate investment trust's difficulties refinancing maturing debt (both secured and unsecured) have been a regular occurence in the popular press for a while now.
Additionally, the company has also stated several times that a bankruptcy filing was a distinct possibility.
The market appears, BofA/Merrill Lynch analysts said, to have taken the announcement in stride as evidenced by CMBX spreads. The spreads are tighter at the top of the capital stack while being slightly wider in the mezzanine tranches. Cash bonds seem to be unchanged.
In a press release, the company has stated that, "All day-to-day operations and business of all of the company's shopping centers and other properties will continue as usual."
GGP has also said that it has received a commitment for a debtor-in possession financing facility of roughly $375 million. The financing, however, still has to be approved by the bankruptcy court.
BofA/Merrill Lynch analysts calculated that GGP-related properties have around $14.8 billion of exposure to the CMBS market.
According to BofA/Merrill Lynch, GGP has historically been a large borrower in the securitized markets and its properties are found in many transactions.
It seems, however, that many of the firm's malls, used as collateral to secure loans in CMBS pools, also filed for bankruptcy protection.
The firm's press release stated that around 158 regional shopping centers owned by GGP and certain other GGP subsidiaries have also filed for protection.