Mall Reaches Agreement To Extend Loan To Oct. 2021
The owners of the Palisades Center have been given a reprieve, for now.
Pyramid Companies has reached an agreement with its lenders to avoid foreclosure.
After temporarily closing due to the coronavirus shutdown, Palisades Center Mall owner Pyramid Companies risked defaulting on its $388.5 million CMBS loan. The loan fell into special servicing in April and the company has not made mortgage payments since.
The Palisades Center had been struggling prior to the shutdown – losing both J.C. Penny and Lord & Taylor, as well as several other retailers including Bed, Bath & Beyond. However, tenants across the board ceased paying rent during the lockdown. Occupancy rate before the pandemic was 82 percent.
According to the standstill agreement, Pyramid on June 19 received a moratorium on debt service payments or reserve deposits until September 9. Pyramid originally sought relief through 2022, but after talks with special servicer Wells Fargo it changed its request to a six month deferral, an extension of the loan and modifications to the cash flow and use of reserve funds.
The maturity date for the loan has been extended to either October 2021 or whenever Palisades Center pays off the last of the 12 monthly installments, whichever comes first.
It is too soon to know whether retailers will survive the lingering effects of the pandemic but there are several large brands that are showing an interest in leasing space, according to internal documents shared with RCBJ by inside sources.
Brands such as Hobby Lobby, Public Pizza and Primark are considering leasing, while Barnes & Noble, which was thought to be vulnerable, is staying, though downsizing to a smaller space on the first floor. Mattel is considering taking a portion of the J.C. Penny space.
Pyramid Companies developed the mall in 1998, and it’s the 11th largest in the country.
The debt was originated by JPMorgan Chase and Barclays in 2016 and was included in a single-asset CMBS transaction, with Wells Fargo as both master and special servicer.
The loan covers 1.8 million square feet of retail space at the property, and excludes space occupied by Macy’s and Lord & Taylor. The mall’s capital stack includes an additional $141.5 million in mezzanine debt, according to rating documents.
Coronavirus has also heavily impacted some of its other tenants, including AMC, which has been attempting to avoid bankruptcy.
Gov. Andrew Cuomo has stalled the opening of malls — thought the Palisades Center began reopening last week. The governor has mandated malls to install enhanced air filtration systems.
Meanwhile, a referendum to allow expansion at the Palisades Center, which has been bedeviled by a protracted coronavirus shutdown, will be voted on at the Town of Clarkstown’s July 30th meeting if a New York State Assembly bill is passed in the Legislature and signed by the Governor. The bill, A34-24, originally died in the Assembly in 2015 but is now a top priority, according to a spokesman for Assemblyman Ken Zebrowski.