The COVID-19 pandemic's impact on the already struggling brick-and-mortar retail pushes another investment over the edge.
Starwood Capital Group loses control of seven malls it had acquired for $1.6B seven years ago after after a recent debt default, the Wall Street Journal reports.
The loss is related to bonds Starwood issued in Israel and defaulted on this spring. A credit ratings downgrade from a local ratings firm triggered an accelerated payment clause that allowed the bondholders to gain control of the assets.
A partnership between New York-based Golden East Investors and El Segundo, CA-based Pacific Retail Capital Partners won a bidding contest among six parties (including Starwood) for the malls, the new operators said.
The partnership didn't say how much they offered for the assets.
The new owners plan to restructure the mortgages on the malls and will look to reposition some of the properties, such as find replacements for department store tenants or convert the malls to other uses, managing principal Steve Plenge told the WSJ.
Starwood Capital is a private investment firm that was formed in 1991 by Barry Sternlicht, who is also chairman and CEO of Starwood Property Trust, a publicly traded REIT.
