The owner of the Mall of America missed another mortgage payment but has entered a forbearance agreement to hopefully avoid foreclosure.
“A forbearance agreement is good news as it gives Mall of America and its owners some breathing space to rebuild their finances as rent payments start to come back,” said Neil Saunders, managing director of the retail division of analytics company GlobalData, in an e-mail. “However, it does not solve the long-term issue of a massive loan against assets which have now reduced in value.”
Mall of America’s collateral value, which was $2.3 billion in 2014, has decreased to $1.9 billion, according to a new report by data collector Trepp. Malls across the country have uphill mountains to climb as they deal with struggling tenants, several of which have filed for bankruptcy within recent months.
Canadian conglomerate Triple Five Group had been three months late on the megamall’s mortgage after MOA s the mall had to temporarily close in March due to state mandates to prevent the spread of the coronavirus.
The loan was transferred to special servicing in May after the mall owners were no longer making full payments. At the time, a mall representative said revenue had fallen 85%.
The special servicer has entered into a cash management forbearance agreement with the owner that would help Triple Five avoid foreclosure and eventually bring the mortgage current.
According to data released Tuesday by data firm Trepp, the Mall of America’s loan was paid through the month of April when the earlier paid-to-date had been March. The new August data shows the loan remains three months delinquent on the $1.4 billion mortgage.
The mall reopened in June and is slowly getting back to normal with the majority of its stores and its indoor theme park Nickelodeon Universe currently open. Tenant rent collections have climbed from 33% in April and May to 50% in July, according to Trepp.
MOA’s finances are complicated by its owners’ other projects.
Triple Five, which is run by the affluent Ghermezian family, pledged a 49% stake in the Mall of America for its American Dream megamall in East Rutherford, N.J., which hasn’t been able to fully open.
Despite the issues, retail experts said they expected lenders to work together with Triple Five on a solution for the Mall of America.
“An agreement is hardly surprising given that the market is completely disrupted. It is in the best interests of all parties to work together to find a solution,” Saunders said.