Retail landlord WPG, the owner of malls and shopping centers around the country, said it's selling its remaining properties and laying off 139 employees at its headquarters, winding down its business nearly four years after filing for bankruptcy protection.
The Columbus, Ohio-based real estate firm has divested about half of its malls and shopping centers in the past year "while the remainder of the portfolio is or will soon be on the market," a company spokesperson told CoStar News in an email on Tuesday. It has sold roughly $1 billion in properties in the past several years, according to CoStar data. WPG, formerly Washington Prime Group, wouldn't say how many properties it has, but its website lists 50.
The malls are coming on the market at a critical loan repayment time, with WPG having nearly $1.1 billion in commercial mortgage-backed securities debt coming due between May and November. Final notifications have been sent to WPG on the nearest maturities, according to CMBS loan commentary.
WPG notified Ohio labor relations officials that it's cutting its workforce at its headquarters at 4900 E. Dublin Granville Road in two waves, with the first layoffs taking effect on June 2. The job cuts will be completed by March 31, 2026, WPG said in a letter to the Ohio Office of Workforce Development. The company's chief financial officer, its chief legal officer and its head of leasing are among those slated to get pink slips.
"As part of WPG’s multi-year journey, the company continues to sell assets ... As a result, WPG is reducing its headcount to reflect the downsized organization," the company spokesperson said in the email.
WPG, now owned by SVPGlobal, was one of three retail real estate investment trusts that filed for Chapter 11 protection during the height of the pandemic in 2020 and 2021, when malls and shopping centers were forced to close. The industry overall has had mixed results trying to bounce back, but mall giants like Simon Property Group have fared well. While bankruptcies have created vacancies, retail space is so tight that many landlords are finding new tenants.
Emerged from bankruptcy protection
WPG, CBL Properties and Pennsylvania Real Estate Investment Trust, known as PREIT, all restructured and emerged from bankruptcy protection with varying outcomes. WPG ended up asking to be delisted from the New York Stock Exchange in 2021 and going private. PREIT, after trying to turn around its mall portfolio, filed for Chapter 11 a second time in December 2023. It emerged from that bankruptcy and went private about a year ago.
Since exiting from Chapter 11 in November 2021, CBL Properties has made progress in stabilizing its operations and finances. For 2024, CBL reported that same-center net operating income increased 0.2% compared with the prior-year period. It completed 4.5 million square feet of leases in 2024. Portfolio occupancy was 90.3% as of Dec. 31, down slightly from year-end 2023's 90.9%. Anticipated bankruptcy-related store closings representing over 290,000 square feet negatively impacted mall occupancy, according to the REIT. Same-center tenant sales per square foot for the fourth quarter increased about 1%.
In turn, WPG has been on a selling spree.
"My understanding is they have been working toward, a successful monetization and winding down of the portfolio for some time," Brandon Svec, national director of U.S. retail analytics for CoStar Group, said in an email. "This is supported by our sales data, which shows they have sold nearly $1 billion in properties over the last 24 months."
SVPGlobal likely thinks it's an opportune time to sell the properties since "investor demand for open-air centers remains strong and WPG has made significant strides in improving the occupancy, tenant mix, and capital structures across the portfolio," Svec added.
SVPGlobal didn't immediately respond to an email from CoStar News seeking comment.
The WPG spokesperson said, "Internally, the company’s strategy has been transparently communicated and understood for some time."
WPG has racked up several big sales in recent months. In December, Brixmor Property Group acquired four grocery-anchored shopping centers from WPG for $211.8 million. And in October, WPG sold an outlet shopping mall in Auburn, Washington, to a New York company for $82 million.
The company said it has been working closely with employees to support them, offering a severance package, access to outplacement services and a development program to help them learn new skills and obtain certifications and degrees to prepare them for their next jobs.