Although the mortgages are non-recourse loans, Horizon Group Properties concedes foreclosure is an option available to the lenders in the wake of the defaults.

"The performance of some of these centers has suffered from a number ofdifferent factors including the bankruptcy of several tenants, the construction of competitive properties and difficult locations," explains Chairman, President and CEO Gary J. Skoien. "Several of the centers which secure these loans are performing well, but are cross-collateralized with those properties which are having difficulty. We are hopeful that we will constructively address the issues facing these centers to the mutual benefit of the lenders and the company."

Horizon Group Properties owns 14 factory outlet centers and one power center in 12 states. Total revenues fell 13% in the first half of the year as the REIT posted a lot of $1.4 million.