As the coronavirus crisis turbocharged the retail apocalypse, mall owners across the country have been falling behind on their mortgage payments. Even The Mall of America in Minnesota, the country’s largest retail center, missed recent payments on its $1.4 billion loan.
Now, two large Chicago-area malls owned separately by Simon Property Group and a KKR-led venture, both missed May debt payments, according to Crain’s. The retail properties, Gurnee Mills and Yorktown Center, are both closed because of pandemic restrictions though Yorktown Center is set to open this weekend.
Simon skipped its $1.3 million May payment on the $257 million mortgage for Gurnee Mills; and the KKR venture with Pacific Retail Capital Partners missed its $333,000 payment on a $107 million mortgage for Yorktown Center, according to Crain’s. Both are CMBS loans.
Simon has reopened nearly 50 malls around the country in recent weeks.
Another area outlet, Louis Joliet Mall, missed April and May mortgage payments on an $85 million loan, according to the report.
The nearly 2 million-square-foot Gurnee Mills — among the Chicago-area’s largest shopping centers — was suffering in recent years after losing Sears and Toys “R” Us stores. And even before the coronavirus, the KKR venture had problems refinancing its mortgage on its 1.4 million-square-foot mall, Crain’s reported.
The coronavirus-caused stress on retailers — which has led to numerous bankruptcies in recent weeks — has implications for the commercial mortgage-backed securities market, which distributes loans through bonds. The Financial Times reported that that upward of one in five loans bundled into commercial mortgage-backed securities are currently on “watch lists” that are recorded by mortgage-servicing companies. [Crain’s] — Alexi Friedman