As one of the most powerful chief financial officers among U.S. mall owners, Bernie Freibaum has held considerable sway for years over financial backers of General Growth Properties Inc.

But as Mr. Freibaum begins to refinance General Growth's $18.4 billion in debt that comes due during the next 3½ years, he is finding that the tables have turned, and lenders are making the most of their new negotiating strength. Industry executives are watching to see how lenders treat companies that have valuable assets yet are saddled with massive debt.

One example of the lenders' upper hand can be seen in a $1.75 billion loan package Mr. Freibaum is piecing together. To get the deal done, General Growth had to grant lenders -- led by Germany's Eurohypo AG -- 25% recourse, a humbling requirement that lenders rarely sought from big companies such as General Growth during the real-estate boom.

Recourse provisions give lenders more ammunition to go after borrowers if they default. In this case, if there is a default and the value of the property pledged as collateral falls short of the loan amount, the lenders can force General Growth to repay as much as 25% of the loan amount through other means, such as selling other properties. The loan also carries lofty upfront fees of 0.5% to 1.5% of the amount lent.

The company confirmed the terms of the transaction but wouldn't elaborate. Mr. Freibaum declined to comment for this article.

"They're no longer in the driver's seat as far as determining the terms of their new debt," said Christy McElroy, an analyst at Banc of America Securities, adding that General Growth nonetheless has several funding options. "The lenders now have the leverage."

It is an abrupt about-face for Mr. Freibaum, one of the wealthiest REIT executives outside the industry's many founders and their scions, earning $6.3 million in total compensation last year and owning 3.1% of General Growth's common shares. He oversees General Growth's acquisitions as well as its finances, using mostly short-term mortgage debt to finance deals in recent years. The Chicago company has total debt of roughly $27 billion, mostly in mortgages tied to specific properties. It owns more than 200 U.S. malls, including flagships such as Ala Moana Center in Honolulu and Fashion Show mall and The Grand Canal Shoppes in Las Vegas.

General Growth Properties Inc. No Gamble? General Growth Properties' Fashion Show mall in Las Vegas

An accountant and lawyer by training, the 56-year-old Mr. Freibaum is known for his hardball stance with lenders. He upset investment banks in March when General Growth sold $822 million in equity without using their services. Supervising such sales typically yields lucrative fees for banks. But Mr. Freibaum sold the shares directly to a handful of General Growth's big existing shareholders, eliminating the need for a middleman.

When General Growth does shop for bankers, they sometimes chafe at the process. Last year, for example, Mr. Freibaum elected to choose bankers for a $1.5 billion sale of convertible bonds by soliciting bids from numerous firms to get the best terms rather than working exclusively with a single bank. Mr. Freibaum didn't divulge certain details of the deal -- such as the exact amount to be borrowed -- until shortly before the bankers were granted 30 minutes to submit their final bids. That left some short on details when outlining bidding options for their superiors.

Also last year, Mr. Freibaum asked some of General Growth's lenders to loosen their loan restrictions so General Growth could sell the $1.5 billion in convertible bonds. The catch: He didn't want to pay a fee in exchange for the new terms. The banks refused, and General Growth eventually acquiesced to paying a small fee.

Despite the grumbling produced by such wrangling with bankers, few observers doubt that General Growth will succeed in refinancing its debt coming due. In fact, Mr. Freibaum appears to have lined up several lenders to help tackle the issue. In addition to the $1.75 billion loan package currently being negotiated, Mr. Freibaum plans to sell $1 billion to $2 billion in mortgages in October and thereafter to mortgage or sell stakes in additional properties.

The concern is that lenders will charge General Growth hefty prices to refinance, and the company will need to mortgage several additional malls, crimping its financial flexibility. Last week, General Growth lowered its forecast for its 2008 per-share funds from operations -- a measure of income factoring out depreciation -- to $3.42 from an earlier range of $3.52 to $3.58 because of the weak economy. The company also postponed $500 million in development projects, partly to conserve capital.

General Growth shares rose $1.47, or 5.6%, to $27.71 in 4 p.m. New York Stock Exchange composite trading. They had declined by 41% in the past year.

Eurohypo lent to General Growth in the past and returned as lead investor in the REIT's latest loan. Few lenders will let grudges block a solid deal, said Ben Marciano, Eurohypo's U.S. general manager.

"Good business is good business, and I think most of the lenders recognize that," Mr. Marciano said. "If they get the terms, pricing and structure that's necessary, [General Growth's financing] will get done."

Write to Kris Hudson at kris.hudson@wsj.com

Real estate growth impacted due to high interest rates: ICICI

A Rising Number of Foreclosed Homes

Treasury Pressures Mortgage Firms

Local Banks Regain Mortgage Business