Underwater: The value of dozens of malls has dropped by more than 70% during the epidemic

Here comes more trouble for US shopping malls.

Destiny USA, New York’s largest shopping center, has seen part of the rise and fall of a lakeside mega mall that helped transform the polluted and declining industrial Oil City environment of Syracuse’s predecessor 30 years ago.

Now, roughly 2.4 million square feet of shopping, hotel and entertainment complexes may be the most well-known in the debt cycle, as it has lost ১ 5001 million, or 1%, of its value since 2014, when the property was last financed, according to commercial real estate. Analysis platform CRED iQ.

It is far from alone. A turbulent chapter has begun to unfold for many malls in America, for a decade a flood of property owners forced Wall Street to borrow which was relatively cheap and easy to come by, but is no more.

A total of US5 US malls, including Drestini USA, with a debt of 45 455 billion in assets, have lost at least 0% of their value during the epidemic through their recent financing.

Absolutely low prices throw many mall owners under the water, leaving them with more debt than their property, a potentially dire situation that could lead to fire sales, loss of creditors and a drop in property prices.

“From a historical point of view, we know that retail has built up substantially over the decades. This problem was rampant before the epidemic, which was a tipping point for the sector.

“In the case of a mall loan, the value of more loans has decreased by at least 50% since the origin of the loan,” Ni said in a phone interview. “The problem is that these loans are about to run out.”

According to the CRED iQ, in a few more extreme examples, the value of several properties was 90% lower than their final financing.

Destiny USA was last valued at $ 203 million, down from $ 710 million seven years ago for New York State property, located 175 miles east of Niagara Falls. The senior borrower still owes 430 million for the senior mortgage.

Destiny USA did not return a number of requests for comment to the owner, developer and recipient Pyramid Management Group.

Two sides of the coin

Like hotels, office buildings and other commercial properties, many mall loans are packaged and sold to investors in the nearly billion 1 billion commercial mortgage-backed securities (CMBS) market.

Established as a public real-estate investment trust, Simon Property Group owns several large malls in the country, including SPG.
+ 1.03%,
And handing over the keys to vulnerable donors during epidemics, but restructuring or rescheduling their corporations.

See: Brookfield will personally return the keys to three malls in a ma 5.5 billion deal

Richard Hill, head of research at US REIT Equity and Commercial Real Estate Debt Research, said:

“If you agree with that, there’s a scenario where REITs are in a better position than they were 24 months ago, net-net,” Hill told MarketWatch, because they’ve dumped some of their inferior stools, Hill told MarketWatch.

The decline in increased mall foot traffic and improved balance sheets is also due to the fact that the stock prices of several REITs have risen this year, even if they are still lagging behind the two-year period.

Views: Shoppers may stockpile gifts due to supply-chain concerns, data show

Shares of mall giant Simon have risen nearly 70% year-over-year, vs. Macerich Co. About 75% of the MAC jump,
+ 3.41%
During the same expansion of the stock, the S&P 500 Index SPX,
+ 0.41%
Dow Jones Industrial Average DJIA, about 21%
+ 0.56%
According to the factset, it has increased by 16.4%.

“Many class A malls are still doing great,” Ni said, adding that it is the B and C sections that are feeling the worst downward pressure.

“We hear what investors are looking for in terms of returns and what their risk profile is,” he said. “Malls are still high-risk investments, but buyers want higher returns.”

Nevertheless, a year ago Hill’s team predicted that the epidemic could spell the end of 30-35% of U.S. malls, and that estimate is still valid. The initial range was based on the Coaster Group’s 1,167 tally of current U.S. malls at the time, which has since dropped slightly to 1,161.

Read on: Meet the boys on Long Island who like the unpleasant shopping mall

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