Rock-bottom prices: 11 malls whose valuations have tanked

Simon and Brookfield operated 5 properties on list

National /
Mar.March 24, 2021 08:00 AM
Crystal Mall in Waterford, Connecticut; Prizm Outlets in Primm, Nevada; and Louis Joliet Mall in Louis Joliet, Illinois (Facebook, Google Maps, iStock/Illustration by Alexis Manrodt for The Real Deal)

Crystal Mall in Waterford, Connecticut; Prizm Outlets in Primm, Nevada; and Louis Joliet Mall in Louis Joliet, Illinois (Facebook, Google Maps, iStock/Illustration by Alexis Manrodt for The Real Deal)

The pandemic has wreaked havoc across the retail industry, but few have been hit harder than second-tier malls. And it’s no surprise the largest mall operators have taken the biggest hits.

Simon Property Group and Brookfield Property Partners controlled 5 of the 11 malls whose valuations have fallen the most, according to Trepp, which tracks commercial mortgage-backed securities.

Trepp compiled the list by comparing mall values in the second half of 2020 to their values when the CMBS deals were issued in 2012, using data from loans on the retail-heavy CMBX 6 index.

The malls whose values plummeted the most were scattered around the U.S. in mostly suburban areas. All the CMBS loans tied to those properties were in default because owners skipped payments. Several operators were either in the process of handing over the keys to lenders or already had given up on the properties.

Some investors like Carl Icahn have targeted those malls by shorting them on the CMBX 6, betting owners would fail to make debt payments and values would sink.

He wasn’t wrong.

These are the 11 malls that have lost the most value. (Each loan doesn’t necessarily back the entire mall.)

1. Crystal Mall in Waterford, Conn. | 88% valuation drop | Current appraisal: $18.7M

Simon Property Group is in the process of handing over the keys to its lender after having defaulted on an $83 million loan, according to Trepp. The loan backs a 500,000-square-foot portion of the 700,000-square-foot mall, The Day reported. In recent months, Macy’s said it would be closing its location, according to the report.

2. Shoppes on Main in White Plains, N.Y. | 81% valuation drop | Current appraisal: $10.8M

Ivy Equities defaulted on a $31.9 million loan backing 257,000 square feet of the shopping center. Last year, Deutsche Bank followed that up with a $35.8 million foreclosure action, the Westchester County Business Journal reported. The mall is unoccupied after two tenants shut their stores, including one that vacated entirely, according to Trepp.

3. Prizm Outlets in Primm, Nevada | 77% valuation drop | Current appraisal: $28.2M

The former Fashion Outlets of Las Vegas sold at a January foreclosure auction for $1.5 million to an unnamed buyer despite its July 2020 appraisal, Bloomberg reported. That followed its previous owner, Rialto Capital Management, having defaulted on a $62.1 million loan. The mall was only 57.5 percent occupied, Trepp noted.

4. Salem Center in Salem, Oregon | 76% valuation drop | Current appraisal: $10.5M

An affiliate of Och-Ziff Capital Management Group defaulted on its $29 million loan, which has been in special servicing since 2017. The lender foreclosed a year later. JLL is now managing the property, which was 77 percent occupied as of 2019.

5. Newgate Mall in Ogden, Utah | 76% valuation drop | Current appraisal: $20M

The mall sold at auction for $20 million on March 19 in a credit bid from the special servicer affiliated with U.S. Bank National Association. The former owner, Time Equities, bought the mall in 2016 and defaulted on its $58 million loan last spring. The mall was placed in receivership in July, according to the Standard-Examiner.

6. Poughkeepsie Galleria in Poughkeepsie, N.Y. | 71% valuation drop | Current appraisal: $68.5M

Pyramid Management Group defaulted on its $75.7 million loan in May. Pyramid was in discussions with the special servicer, according to Trepp. One of the mall’s anchor tenants J.C. Penney, closed in October as part of the retailer’s restructuring plan.

7. Florence Mall in Florence, Kentucky | 63% valuation drop | Current appraisal: $58.1M

In January, Brookfield Property Partners handed over the keys to its lender after defaulting on a $90 million loan, which had been sent to the special servicer in July. The mall is anchored by J.C. Penney and Macy’s.

8. Town Center at Cobb in Kennesaw, Georgia | 60% valuation drop | Current appraisal: $68.5M

Deutsche Bank foreclosed on Simon’s Property Group’s 1.2-million-square-foot mall earlier this year. Simon defaulted on the $177 million loan — which was split into two pieces — and it was transferred to special servicing in June, Trepp noted. The bank and other investors had originally looked to sell the mall in February, with bids starting at $130 million, according to the report. A live auction was held outside, but there were no bids.

9. Louis Joliet Mall in Louis Joliet, Illinois | 58% valuation drop | Current appraisal: $55.1M

An affiliate of Starwood Capital Group was planning to hand over the keys to its lender in October, after having defaulted on an $85 million loan in March. The loan went into special serving in May.

10. Emerald Square Mall in North Attleborough, Mass. | 57% valuation drop | Current appraisal: $72.5M

The mall, which had been owned by Simon Property Group, was placed in receivership in November, according to the Sun Chronicle. Two loans totaling $97 million were previously sent to special servicing in June. Mall occupancy dropped to 86 percent in September, down from 90 percent at year-end 2019, according to Trepp.

11. Greenwood Mall in Bowling Green, Kentucky | 56% valuation drop | Current appraisal: $46.7M

Brookfield Property Partners is in default on its $43 million loan. The property could be headed for foreclosure because Brookfield has refused to pay off any more of the debt, according to Trepp.


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