Mall Crisis Continues As Trade Association Drops 'Shopping Centers' From Its Name forbes.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from forbes.com Daily Mail and Mail on Sunday newspapers.
The valuation for about two-thirds of Simon Property Group’s Crystal Mall in Waterford, Connecticut was slashed 87 percent to just $18.7 million, a sign of just how bad things are for many suburban shopping centers.
About 518,000 square feet of the property backed a $95 million commercial mortgage-backed securities loan, according to Trepp. With the new appraisal, the loan-to-value ratio comes to an eye-popping 508 percent, meaning the mall’s debt is worth about five times more than a majority of the mall.
That piece of the property was appraised at $153 million in 2012.
The appraisal reduction is hardly a surprise: A report from Kroll Bond Rating Agency in November noted that Simon was planning to hand over the keys to the Crystal Mall, along with three other shopping centers, to its lenders.
Wikimedia Commons/John Phelan The Square One Mall in Saugus, Massachusetts.
Last week, Simon relinquished its ownership of an Atlanta mall in a foreclosure auction that saw no bids. In November, the REIT ceded control of at least four other mall properties it controlled. This week, according to Fitch Ratings, the mall operator is over 60 days delinquent on an $85.6M loan backing a Boston-area mall for the second time in four months.
The news comes after a dim earnings report Monday, in which Simon reported a $1B drop in revenue and income from 2019 to 2020. In the company’s earnings call Monday evening, Chairman and CEO David Simon acknowledged that it will work with lenders who are open to taking over some of the REIT’s underperforming malls.