Struggling White Marsh Mall Sells Out Of Receivership
As shoppers prepare to search for discounts on Black Friday, one investor has found a deal to buy a languishing shopping mall.
New York-based Spinoso Real Estate Partners acquired White Marsh Mall, formerly owned by Brookfield, out of receivership, the Baltimore Business Journal reported.
The deal was recorded in Maryland property records with a price tag of $190M, but Morningstar Credit Head of CRE Analytics David Putro said that figure represents that Spinoso likely assumed the property's loan, rather than any money changing hands.
The mall received a new appraisal in July that put its value at $80M, down from $300M when its loan was issued in 2013.
The property has a two-part CMBS loan that totaled $190M when it was issued, and the parts now have outstanding balances of $108M and $79M, Putro said.
Brookfield didn't pay the loan off by its initial maturity date in May 2021, and in January 2023, the property was placed into receivership. The receiver appointed was Spinoso.
The firm, in a post on its website in February 2023, said that it looked forward to "making a big impact at the property and in the community through leasing, property management and marketing."
Spinoso didn't respond to a request for comment on its acquisition of the property. Brookfield declined to comment.
Along with the sale, the maturity date on the loan was extended to May 1, 2027, according to servicer commentary in Morningstar's database.
The White Marsh mall, one of the largest shopping centers in the region, opened in 1981 about 12 miles north of Baltimore off I-95. Brookfield became its owner in 2018 when it acquired General Growth Properties.
Putro said it is common when companies obtain malls through corporate acquisitions to sell underperforming assets, and he said it will have a minimal impact on Brookfield because CMBS loans are non-recourse.
"From the mall’s perspective, having an experienced operator at turning around malls and adding multifamily should be a positive," Putro said of Spinoso. "It could be a positive for the loan as well, as there are now three additional years to try to increase cash flow and add value."
The sale and loan cover a 700K SF portion of the mall, while some of its anchor department store spaces are separately owned. Those include a 169K SF former Sears space that closed in 2020 and remains vacant, along with JCPenney and Macy's stores that are still open.
The 700K SF portion is 93% occupied, but its net cash flow last year was 40% below the underwritten level, Putro said, adding that performance never rebounded after Covid. The shuttered Sears store has been eyed for a multifamily redevelopment, BBJ reported, citing a county elected official.
"The reuse of the Sears space doesn’t have a direct effect as it was not collateral for the CMBS loan, but I suppose bringing residents on-site can’t hurt foot traffic," Putro said. "Still, there’s a steep road to climb to get that value back to a spot where the loan can be refinanced or sold to fully retire the debt."
