Mall Of America Successfully Refinances Its Once-Delinquent $1.4 Billion Mortgage

By Tyler Durden

With investment banks backstopped by essentially unlimited liquidity from Central Banks, 2021 could become the year that everybody officially refinances, kicks the can down the road one more time, and offers up their “comeback story”. And if it can happen in the mall industry, it can happen anywhere.

The shining beacon of brick and mortar retail in the United States – the Mall of America – has officially struck a deal with its lenders to refinance the terms of its $1.4 billion mortgage, after missing payments earlier this year due to the Covid crisis.

Its lenders say they have “strong confidence in the long-term success and viability of Mall of America,” according to CNBC. The mall’s loan has been current since December and, beginning with the December payment, the loan was “converted to interest-only through maturity”. 

According to New York based research firm Trepp, retail tenant collections at the mall fell to a low of 33% in April and May of 2020.

But the Mall of America’s success may not be a guarantee for the rest of the industry. Manus Clancy, Trepp senior managing director, told CNBC:

This is a trophy asset, and trophy assets are more likely to muddle through the pandemic than B [or] C malls. If you have an A mall, you see this as a vote of confidence. If you have B [or] C, there is no bearing. The lower-rated malls … are not going to make it.”

Dan Jasper, vice president of communications for Mall of America, said:

Facing these unprecedented economic times, we immediately began to work with our lending partners to address the cash flow issues created by this loss of revenue. We are pleased to have been able to resolve the outstanding issues to the satisfaction of all parties involved which included a modification of the loan terms.

In May of last year, about 2-3 months into the pandemic, we noted that the Mall of America had missed two months of payments for its $1.4 billion commercial mortgage-backed security.

“The loan is currently due for the April and May payments,” a report filed by the trustee of the debt, Wells Fargo & Co., which is also the master servicer for the loan, said at the time. “Borrower has notified master servicer of Covid-19 related hardships.”

The 5.6 million-square-foot (520,000-square-meter) mall was ordered closed on March 17, and has since re-opened and traffic has “started to rebound, especially around the holidays”, according to the CNBC report.

“While the coming months will continue to present unique challenges, we remain optimistic for our business and look forward to the day when we can once again welcome back visitors from around the world,” Jasper concluded.

The Mall of America is owned by members of the Ghermezian family, whose holdings also include the West Edmonton Mall, a 5.3 million-square-foot complex in their Canadian hometown, and American Dream, a 3 million-square-foot mall in East Rutherford, New Jersey.

Source: Zero Hedge

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