Someone still believes in Pyramid Management Group’s flagship mall outside of Albany.
An unidentified lender purchased the Crossgates Mall’s $243 million mortgage debt at auction, the Times Union reported. Trepp had flagged the sale in a newsletter.
Details about the deal are sparse, though one thing is clear: The debt was sold at a significant discount. Bondholders lost $100 million on the sale, according to Trepp.
Fitch downgraded the debt in March, citing declining performance and concerns about Pyramid’s ability to refinance, even after the debt’s maturity date was extended by a year. The downgrade proved justified, as the Syracuse-based developer defaulted in May on the mall’s three mortgages, which were sent to the auction block in June.
A $300 million mortgage dating back to 2012 was purchased last month by an affiliate of Morgan Stanley, the Times Union reported, citing a filing with the Albany County clerk.
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It is unclear whether the buyer of the loans aims to take control of the property or just expects Pyramid to be able to service the debt. A Pyramid official told the Times Union it was “business as usual” at the mall.
Retail has been resilient as the office sector and some multifamily properties have suffered, but older, enclosed malls are lagging. Pyramid’s portfolio demonstrates the difficulty mall operators are facing.
Since 2011, the value of the Poughkeepsie Galleria in the Hudson Valley has declined 71 percent, cratering from $237 million to $68 million, according to CRED iQ appraisal data. At Destiny USA, the state’s largest mall, Pyramid got a five-year extension on $430 million worth of debt previously set to mature last summer.
— Holden Walter-Warner