Originally published by REALTOR Magazine | October 28, 2020
Saks at Miami mall, Midtown Manhattan retail property become foreclosure targets
As the pandemic presses on, lenders are looking to delinquent mall owners to meet their payment obligations.
This spring, lenders at first showed some willingness to allow rent deferrals or other concessions for mall owners facing cash flow issues. But as store closures have accelerated, the high number of missed payments is testing lenders’ patience and spurring them to crack down on delinquencies, The Wall Street Journal reports.
Many landlords continue to struggle amid the coronavirus’ sweeping impact on in-store retail. Store closures in malls have accelerated since stay-at-home orders were issued in the spring.
Lenders are growing concerned about a quick drop in retail property values as a result. The Wall Street Journal says values could plunge by up to 75% nationwide. As such, lenders are, in some extreme cases, moving ahead on foreclosure sales to try to recoup some of the money owed.
For example, lenders to Dadeland Mall’s Saks Fifth Avenue in Miami are moving to foreclose on the property owner for failing to pay its mortgage since April. According to the Journal, the $846 million mortgage is securitized with collateral from 10 Saks stores and 24 Lord & Taylor stores nationwide. That means the lender could seize these other properties through the foreclosure process.