The East Bay’s Sunvalley Shopping Center could be at risk of mortgage default despite nearly full occupancy at the mall.
A $180 million commercial mortgage-backed securities loan on the property is heading into special servicing for a second time, the San Francisco Business Times reported. The borrower, Simon Property Group subsidiary Taubman Realty Group, told the lender it doesn’t have the money to meet its $135.7 million debt before its maturity date in September.
Morgan Stanley originated the $190 million loan for the mall in Concord before selling it to a commercial mortgage-backed securities trust in 2012. KeyBank National Association was listed as the loan’s special servicer in the latest bondholder report.
The Sunvalley Shopping Center’s net cash flow last year was down 39 percent from the time of the loan’s underwriting in 2012 despite the complex maintaining 95 percent occupancy as of the end of last year.
The mall’s value has sharply dropped in value over the past decade. It was last appraised at $170 million in 2022, down from $350 million in 2012.
The loan first went to special servicing after its original maturity date in Sept. 2022 and came out with extension options for 2024 and 2025 and an interest rate of 4.44 percent — an attractive rate when Class B and Class C malls usually faced rates higher than 6 percent.
Simon, the country’s largest owner of malls, took over the Sunvalley Shopping Center in 2020 when it acquired Taubman Centers and affiliate Taubman Realty Group.
The mall might be almost full right now, but several businesses could depart in the coming years. Round 1 Bowling & Arcade, a 53,000-square-foot arcade that moved in in 2016, is approaching the end of its lease in August of next year. Nordstrom’s lease for 48,000 square feet is up in Sept. 2028. A 24 Hour Fitness, spread across two floors and 31,000 square feet, vacated in October, while the mall’s Forever 21 location recently closed as part of its bankruptcy.
— Chris Malone Méndez
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