Syra­cuse mall may de­fault on its mort­gage

Pyra­mid, owner of sprawl­ing Des­tiny USA, pur­su­ing ex­ten­sion

The Buffalo News - - BUSINESS - By Rick Mo­ri­arty

SYRA­CUSE – Des­tiny USA, one of the largest malls in the na­tion, is strug­gling to pay its mort­gage, ac­cord­ing to a pub­lished re­port.

The Wall Street Jour­nal said Tues­day the Syra­cuse shop­ping mall’s mort­gage was re­cently taken over by a spe­cial ser­vicer, a com­pany that deals with de­faults or rene­go­ti­a­tions of loan terms. The ser­vicer said it ex­pects the mall’s owner, Pyra­mid Man­age­ment Group, to de­fault on the mort­gage when it comes due in June, the news­pa­per said.

Pyra­mid has two mort­gages on the 2.4 mil­lion­square-foot mall to­tal­ing $430 mil­lion, ac­cord­ing to the re­port.

A Pyra­mid rep­re­sen­ta­tive told the news­pa­per it is now in dis­cus­sions for an ex­ten­sion on its mort­gage. The rep­re­sen­ta­tive said the mall had ex­pe­ri­enced ten­ant clo­sures “just as other prop­er­ties across the coun­try have on the brick and mor­tar front,” ac­cord­ing to the re­port.

Des­tiny USA’s fi­nan­cial strug­gles were re­ported as part of a larger story about the chal­lenges that shop­ping malls are fac­ing as ma­jor re­tail chains close stores.

Com­mer­cial Real Es­tate Di­rect re­ported March 28 that “weak­en­ing col­lat­eral cash flows” and the pend­ing maturity date of the mall’s mort­gage prompted the trans­fer of the mort­gage to spe­cial ser­vicer Wells Fargo Bank.

Pyra­mid said it played a role in get­ting the loan trans­ferred be­cause it did not ex­pect to re­tire the loan in June, ac­cord­ing to the March re­port. The same pub­li­ca­tion re­ported in 2018 that the mall had seen net cash flow de­cline by nearly 10 per­cent since 2014.

The mall’s loans con­sist of two, non-re­course, mort­gage loans. Ac­cord­ing to the Kroll Bond Rat­ing Agency, the first of the two loans has a bal­ance of $300 mil­lion and is se­cured by a mort­gage on ap­prox­i­mately 1.2 mil­lion of the 1.5 mil­lion square feet of space that com­prises Phase I of the mall, for­merly known as Carousel Cen­ter.

The sec­ond mort­gage loan has a bal­ance of $130 mil­lion and is se­cured by a mort­gage on an 874,200-square-foot ex­pan­sion parcel, which com­prises the en­tire Phase II of the prop­erty. Af­ter the sec­ond phase’s con­struc­tion a decade ago, the mall was re­named Des­tiny USA.

The orig­i­nal sec­tion of the mall has three tra­di­tional an­chor stores – Macy’s, JCPen­ney and Lord & Tay­lor. The JCPen­ney store is part of the loan col­lat­eral, while Lord & Tay­lor and Macy’s own their own stores.

The mall’s ex­panded sec­tion is pri­mar­ily com­prised of out­let re­tail­ers, restau­rants and en­ter­tain­ment venues, ac­cord­ing to Kroll’s re­port. They in­clude Dick’s Sport­ing Goods; RPM Race­way, an in­door go-kart track; and Won­der­works, an in­ter­ac­tive science at­trac­tion.

Syra­cuse mega-mall Des­tiny USA was for­merly known as the Carousel Mall.

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