Washington Prime Group, the spinoff of Indianapolis-based Simon Property Group that owns major malls in Indiana including Carmel’s Clay Terrace, is preparing a potential bankruptcy filing after skipping a $23 million interest payment on its debt.
Bloomberg reported Thursday that Washington Prime, which owns about 100 shopping centers throughout the U.S., said last month that it would use a 30-day grace period to continue negotiations with lenders. But those talks are faltering, according to Bloomberg’s sources.
A real estate investment trust, Washington Prime also owns Keystone Shoppes at 3435 E. 86th St., Greenwood Plus at 1251 U.S. Highway 31 North, Washington Plaza at 10030 E. Washington St., and Village Park Plaza in Carmel.
Washington Prime officials did not respond to Bloomberg’s request for comment. The company is headquartered in Columbus, Ohio, and maintains an additional office in Indianapolis.
The plan to file for Chapter 11 bankruptcy reorganization isn’t final. It could be avoided if Washington Prime makes progress with its lenders or its grace period is extended.
Washington Prime shares were trading at $6.28 at market close on Wednesday. After Bloomberg reported news of the potential bankruptcy on Thursday, shares closed at $2.51. At the end of trading on Friday, shares closed at $2.00.
Simon announced in 2013 that it would spin off its strip centers and smaller enclosed malls into a new public company, which soon was dubbed Washington Prime Group and went public in 2014. It soon announced that it had agreed buy out a partner’s 50% share in the upscale Clay Terrace for $22.9 million and assume $57.5 million in debt.
The 577,000-square-foot lifestyle center was co-developer by Lauth Property Group and opened in 2004.
Washington Prime filed plans in February 2020 to diversify Clay Terrace, located at southwest corner 146th Street and U.S. 31, with a planned 140-room hotel, 290 apartments, 200,000 square feet of office space and an additional 70,000 square feet of retail. Those plans were delayed due to the pandemic.
The Carmel City Council agreed in late December to rezone a portion of the center.
Like a huge share of retail landlords, Washington Prime has struggled during the pandemic. The company said its rent collection rate dropped to 52% during the second quarter of 2020 before rebounding in the third quarter to about 87%, Bloomberg reported.