Brookfield Property Partners agreed to throw in the towel on three struggling malls owned by the real-estate giant, with the possibility of more to come, as it goes private in an $6.5 billion deal, according to a new report, MarketWatch.com reported. The real-estate owner recently agreed to a “friendly foreclosure,” or when a borrower willingly hands back a property to creditors, on the Florence Mall in Kentucky, the Bayshore Call in Eureka, Calif. and the Pierre Bossier Mall in Bossier City, La., with a combined $174.6 million of senior mortgage debt, according KCP Research. The KCP team also pointed to negotiations between Brookfield Property BPY, and lenders on seven other embattled malls, saddled with $797.8 million of combined senior debt, about potentially friendly foreclosures. If that happens, Brookfield would be walking away from almost $1 billion of mall debt borrowed over the years in the commercial mortgage-backed securities (CMBS) market, a popular form of finance where Wall Street banks bundle loans on commercial properties into bonds, which are then sold to investors, often money managers, pension funds and the like. Even before the pandemic, some big-name investors were betting against debt on downtrodden malls, with the view to profit as cash flows at properties fell, borrowers defaulted and prices on mall-related securities plunged.
