Greendale Mall in financial trouble
Worcester’s only shopping mall is in financial trouble, having defaulted on its loan, its revenue continuing to slide and key leases coming up for renewal.
The Greendale Mall, which is owned and operated by Simon Malls, has had its $45 million commercial mortgage-backed securities (CMBS) loan against it sent to the loan’s special servicer, according to information compiled by Trepp, a data provider for those in the commercial real estate, CMBS, and banking markets. This action reflects a default on the loan, with the special servicer set to find a workout strategy for the loan. This represents a foreclosure on the loan, but does not reflect the status of the property, according to Trepp.
Simon Property Group is a commercial real estate company and also owns and operates the Auburn Mall and Solomon Pond Mall in Marlborough. The company did not respond to requests for comments before deadline for this story.
The transfer of the Greendale Mall loan was made because several significant leases expire over the next two years. TJ Maxx is the anchor of the mall, making up 18 percent of the gross leasable area (GLA), and has a lease that runs through 2020, Trepp reported. However, the leases for Big Lots and DSW Shoes, with 10 and 7 percent GLA respectively, will end in January.
Even with those stores in place, the property is only 80 percent occupied and revenue at the mall has been slipping, according to Trepp. The mall’s debt service ratio coverage (DSRC), which refers to the amount of cash flow the property generates compared to the amount owed on the loan, was at 0.96 through 2014, but fell to 0.76 during the first six months of 2015.
A DSRC of 1.2 is “concerning,” according to Trepp.
In an interview for the Sept. 14 Worcester Business Journal print edition story ‘Malls lean on innovation for success’, Rob Robledo, vice president of retail tenant services at CBRE New England raised concerns about the Greendale Mall based on its relatively small size, 309,000 square feet, and lack of innovative features to draw people in such as a premiere restaurant. During that interview, Robledo speculated that the mall could be redeveloped into a mixed-use property.
“As an enclosed mall I think it will always be challenged because of the size,” he said in the September interview. “I have to guess that in 20 years that mall is not an enclosed mall.”
In the print story, Robledo and other experts cited the impact that large, open-air shopping centers have had on enclosed shopping malls. However, shopping malls still have their place, especially during harsh New England winters.
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