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Depletion of Retailers, COVID Has Compromised Palisades Center’s Vitality; Mall Has Defaulted On Loan
RETAIL NEWS
After a Herculean fight to recover from the pandemic, the Palisades Center megamall in West Nyack could be headed for a sale to satisfy its owner’s debts.
Wilmington Trust, acting as a trustee for CMBS bondholders, filed in New York Supreme Court, New York County, to foreclose on the 2.2 million-square-foot shopping and entertainment complex, claiming Syracuse-based owner Pyramid Management Group defaulted on a $418.5 million loan tied to the mall property.
JPMorgan Chase and Barclays provided Pyramid with the loan in 2016 and assigned the debt to the CMBS trust and Wilmington as the trustee that same year. Palisades Center suffered from the loss of anchor tenants including JCPenney in the years that followed, and Covid-related business shutdowns exacerbated the situation.
The loan was set to mature in April 2021, but Pyramid asked for a temporary moratorium on payments early in the pandemic, when a default appeared imminent. The two sides reached a standstill agreement in June 2020, extending the loan’s maturity date.
But Pyramid failed to make good on its payments this past fall, according to the foreclosure suit, and the loan went into default, despite a forbearance agreement entered into in October of 2022. Pyramid was notified of the default in November of last year.
Wilmington Trust is now seeking to take possession of the mall. The trustee has also asked the court to appoint a receiver and to award the trust all payments it claims it is owed, including the remaining loan balance, interest, late payment charges and other fees. Wells Fargo is the special servicer on the loan. Plaintiffs also asked that the assets be sold to satisfy the obligations under the notes.
The Palisades Center, the largest tax generator for the Town of Clarkstown, is the nation’s 12th-largest mall by in terms of leasing space. It was founded amid opposition and controversy in 1998 and includes a ferris wheel, ice rink and 21-screen AMC movie theater. Appraisers pegged the property’s value at $425 million in 2020, according to Trepp, less than half of the $881 million it was valued at in 2016.
Pyramid’s portfolio includes 15 malls across upstate New York and New England, which combine for nearly 18 million square feet, according to its website.
Portions of this article were cited from The Real Deal.
In other news
American Dream, owned by Canadian mall developer Triple Five Group, missed another $8.8 million debt payment. Last year, the mall initially missed an Aug. 1 deadline, due to insufficient funds.
The reserve account tapped for payments made in August 2021 and February 2022, again had insufficient funds to make a payment due last week, according to a notice to bondholders from U.S. Bank Trust Co. As of Feb. 1, the balance was $878.50.
Bondholders last year also received a notice of default on interest payments.
With the traditional enclosed shopping center in decline, mall developers and operators are scrambling to reimagine the model.
