Washington Prime Group, facing an uncertain future, will go private

Dive Brief:

Washington Prime Group on Tuesday said it will voluntarily delist from the New York Stock Exchange, with the requisite filing with the Securities and Exchange Commission to be made around Sept. 20.
The retail real estate investment trust, which runs several struggling shopping centers, expects that its last day of trading will be around Sept. 29, according to a company press release.
In June, the REIT filed for bankruptcy in Texas and gained approval for its exit plan on Friday, according to documents filed by the presiding judge.

Dive Insight:

In its press release, Washington Prime Group noted that trading on the open market isn't worth the expense. The REIT faces an uncertain future amid a long-running decline in malls as both anchor department stores and specialty stores have fled.

The trouble worsened during the pandemic, which has ushered in a new reality for even the healthiest shopping center REITs. While traffic is up as shoppers have returned to brick-and-mortar stores, including those in malls, occupancy is challenged. Several retailers, including Victoria's Secret, Gap, Banana Republic and Nordstrom, have closed or plan to close mall-based stores as they shrink their footprints, move to other retail models or both.

In this environment, a lot of power has shifted to tenants. Perhaps the most robust mall landlord, Simon Property Group, has joined weaker ones in accepting shorter-term leases and rents based on sales, two things that only feed the uncertainty in the space.

The unknowns extend to the value of many of the properties. In some cases, including at Washington Prime Group, malls are walking away from mortgages as the property value plummets. On Friday, bankruptcy Judge Marvin Isgur agreed to the REIT's bankruptcy plan without anyone really knowing how much it's worth, according to Bloomberg.

Washington Prime Group canceled a planned auction last month after it garnered no bids on properties through the bankruptcy process, according to court documents. The REIT joins Brookfield Property Partners in going private. That mall REIT struck a deal in April to be fully acquired by Brookfield Asset Management for $6.5 billion.