Distress hits Town East Mall, $66M CMBS balance to special servicing

Retail real estate is booming in Dallas-Fort Worth, but some owners hamstrung by high interest rates are still struggling to pay the bills. 

That’s what happened to Brookfield Properties’ Town East Mall in Mesquite. 

The Toronto-based commercial real estate company has been struggling for more than four years to pay off a CMBS loan package that was issued in 2012. A $66.4 million balance on one of the loans has been sent to special servicing for maturity default, according to data from Morningstar Credit. 

The loan, which was originated by Barclays, was set to mature in June 2020. Brookfield defaulted on it in 2020 and ’21 and modified it twice, pushing back the fully extended maturity date to June 1 of this year. 

The Town East Mall loan represents about 40 percent of the total loan pool. The deal also includes a loan for Tucson Mall, another Brookfield property. It was transferred to special servicing in May, Morningstar Credit wrote. Both have the same maturity date. 

The deal originally included a loan for Fashion Place, a mall in Murray, Utah. That loan was repaid in June 2021. 

Town East Mall was built in 1971. The 1.2 million-square-foot mall is anchored by Dick’s Sporting Goods, Dillard’s, J.C. Penney and Macy’s. In June 2022, the mall occupancy was 80 percent; its appraised value had declined from $254 million when the loan was issued to $187 million in June 2021.

Brookfield Properties is a subsidiary of Brookfield Property Partners, the real estate arm of Brookfield Asset Management. Brookfield Properties acquired mall operator General Growth Properties in 2018, and it opened a Dallas office in 2020.  

In addition to Town East Mall, it owns Hulen Mall in Fort Worth and Stonebriar Centre in Frisco. 

Brookfield Asset Management took the operation private in 2021 after it was dealt blows by the pandemic. 

The firm has been trying to refinance its malls after $1 billion worth of loans tied to Brookfield properties were in distress last year. 

In June, Brookfield scored fresh financing for about 700,000 square feet of a 1.2 million-square-foot mall in the Inland Empire of Southern California, with a $265 million loan. The firm also landed a $750 million refinancing for 1 Liberty Plaza, a 2.3 million-square-foot tower in Manhattan’s financial district. 

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