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Palisades Center Mall operator avoids financial calamity (for now)

Pyramid Companies reaches forbearance agreement with special servicer on $389M CMBS loan

The Palisades Center and Pyramid Management Group CEO Steve Congel (Google Maps)
The Palisades Center and Pyramid Management Group CEO Steve Congel (Google Maps)

One of the nation’s largest malls has come to an agreement with its lender to stave off foreclosure.

After temporarily closing due to the coronavirus shutdown, Palisades Center Mall owner Pyramid Companies risked defaulting on its $388.5 million CMBS loan. The loan fell into special servicing in April.

But according to the standstill agreement detailed on Trepp, Pyramid on June 19 received a moratorium on debt service payments or reserve deposits until September 9. Pyramid originally sought relief through 2022, but after talks with special servicer Wells Fargo it changed its request to a six month deferral, an extension of the loan and modifications to the cash flow and use of reserve funds, Trepp reported.

The maturity date for the loan is now extended to either October 2021 or whenever Palisades Center pays off the last of the 12 monthly installments, whichever comes first.

Robert Congel’s Pyramid Companies developed the mall in 1998, and it’s the 11th largest in the country.

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The debt was originated by JPMorgan Chase and Barclays in 2016 and was included in a single-asset CMBS transaction, with Wells Fargo as both master and special servicer.

The loan covers 1.8 million square feet of retail space at the property, and excludes space occupied by Macy’s and Lord & Taylor. The mall’s capital stack includes an additional $141.5 million in mezzanine debt, according to rating documents.

The mall was fully leased in 2016, but has since been faced with the departure of J.C. Penney, Lord & Taylor and Bed, Bath & Beyond, dropping the occupancy rate to 82 percent.

Coronavirus has also heavily impacted some of its other tenants, including AMC, which has been attempting to avoid bankruptcy.

Generally, malls in New York have been stifled by Gov. Andrew Cuomo. Under new guidelines, malls may only reopen if they install enhanced air filtration systems — a restriction that no other retailer faces. However, according to its website, Palisades Center Mall is open.

Contact Sasha Jones at sasha.jones@therealdeal.com

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CmbsCoronavirusMallsReal Estate LoansRetail