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    Friday, March 24, 2023

    Report: Loan holder forecloses on Crystal Mall

    Waterford ― After Crystal Mall’s owners failed to make a loan payment due in June, the loan holder foreclosed on the struggling property, according to CoStar, a provider of commercial real estate information and analytics.

    The owners included Simon Property Group, Teachers Insurance and Annuity Association of America and the Canada Pension Plan Investments, said CoStar, which reported the mall is now owned by Rialto Capital, an investment management company.

    Attempts to reach spokesmen for Rialto and Simon were unsuccessful.

    Simon has owned Crystal Mall since 2012, acquiring it after obtaining a $95 million loan secured by a 518,500-square-foot portion of the 783,300-square-foot mall. The portion securing the loan does not include the vacant mall spaces once occupied by former anchors Sears and Macy’s, which closed in 2018 and 2021, respectively.

    Seritage Properties owns the former Sears space while CRJ Waterford, an entity with a Brentwood, Tenn., address, purchased the former Macy’s space last year for $4 million.

    The Simon-owned portion of the mall was appraised in April at $18 million, down from $153 million in 2012, according to CoStar.

    In a ratings action issued last month, Moody’s Investors Service said Crystal Mall’s performance has declined in recent years due to lower rent revenue. In 2020, its net operating income was down 30% over the previous year and was 60% below what it was in 2012. Last year’s net operating income was down 1% over the previous year’s.

    “The loan transferred to special servicing in July 2020 due to imminent default and as of a September 2022 remittance statement was last paid through its September 2021 remittance date,” Moody’s said in its October ratings action. “The loan is reportedly in the foreclosure process. … The loan has been declared non-recoverable by the master servicer and Moody's anticipates a significant loss on this loan.”

    During a quarterly earnings call this week, David Simon, Simon’s chairman and chief executive officer, was bullish on brick-and-mortar retail.

    “It’s been a difficult year for e-commerce, and bricks is where the action is,” he said.

    Simon’s net income, or profit, for the quarter ending Sept. 30 was $539 million, down from $679.9 million in the same quarter the previous year.

    Bed, Bath & Beyond announced in September it planned to close its Crystal Mall store by the end of the year. The store is located above Christmas Tree Shops in one of the mall’s four anchor positions. JC Penney is the mall’s other remaining anchor.

    Crystal Mall is managed by Spinoso Real Estate Group, based in Syracuse, N.Y.


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