Mall short-sellers see a big payout from Nevada mall auction

Loan on Las Vegas’ Prizm Outlets realized 120% loss

National Weekend Edition /
May.May 30, 2021 09:00 AM
The colorful Prizm Outlet in Nevada. (Prizm Outlet via Facebook)

The colorful Prizm Outlet in Nevada. (Prizm Outlet via Facebook)

A big payout has arrived for investors who shorted a retail-heavy commercial real estate debt index.

A loan on the Prizm Outlets mall outside Las Vegas realized a 120 percent loss after the property sold at auction for just over $400,000, according to Bloomberg News. The buyer was not revealed, but New York-based Kohan Retail Investment Group now lists the property on its website.

The total realized loss for the $62.2 million loan, accounting for fees and reimbursements to the master servicer, was $74 million. It’s the largest loss for a CMBS loan since 2008, according to Bank of America.

The Prizm sale was the first auction of a property linked to CMBX 6, a credit derivatives index that has heavy exposure to malls and shopping centers. Of its 39 malls, 31 are impaired, according to MP Securitized Credit Partners, which is shorting the index.

Carl Icahn is another investor shorting the index. Icahn has preached the short since it became clear the pandemic would devastate brick-and-mortar retailers and properties.

“We believe these mortgages will have the same disastrous fate as mortgage-backed securities had in the 2008 debacle,” Icahn told Bloomberg this week.

Icahn and other investors betting on those debts have already cashed out on some of their bets. Some of the biggest mall investors in the country, including Simon Property Group and Starwood Capital Group have defaulted on loans.

[Bloomberg] — Dennis Lynch 


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