Taubman Defaults On $140M Loan For Bay Area's Sunvalley Mall
Michigan-based Taubman Centers has missed its final payment on a loan collateralized by the 57-year-old Sunvalley Shopping Center in the East Bay, sending it into default.
The status of the $140M loan tied to the 1.3M SF Concord asset changed to nonperforming matured balloon, according to Trepp.
At midyear, the shopping center was 95% occupied.
The loan’s maturity date was extended by two years from September 2022 to September 2024. The debt service coverage ratio, based on net cash flow, is considered profitable.
“As of October, the status has now turned to performing matured balloon, so the borrower is back to making interest payments but has not fully paid off the loan, and based on this progression we would assume that there is trouble securing refinancing,” Trepp analyst Emily Yue told Bisnow in a written statement.
There was a partial liquidation of the loan totaling $535,500, according to the remittance file, Yue said. No other servicer notes were included, however.
“The switch from nonperforming to performing in October is promising,” Yue wrote.
“While we do not have insight into the operations of the property, we can generally say that the current status at Sunvalley Mall does not say anything specific about plans to shut down or liquidate,” she said.
The Sunvalley loan is part of a CMBS package collateralized by the Concord mall and Clackamas Town Center, a 1.4M SF mall in Happy Valley, Oregon. The $191.4M Oregon loan was extended as well to October 2024.
Additional retail market distress extends across the bay to downtown San Francisco.
Emporium Centre San Francisco, previously owned by Westfield and Brookfield, heads to a foreclosure auction Nov. 14.
The owners have yet to pay $625M to lenders Deutsche Bank and JPMorgan Chase, the San Francisco Chronicle reported. Deutsche Bank appointed Trident Pacific as its receiver.
The mall, built circa 1988, struggled with diminished foot traffic downtown, plummeting sales and shoplifting in the wake of the pandemic.
There is approximately $120.6B in outstanding CMBS retail debt nationwide, $1.4B of which is in the Bay Area, Trepp reported.
Modern, well-maintained malls in prime locations with diverse tenant mixes have maintained high occupancies, Yue said. Such properties and their debt perform well for investors. Sunvalley and the Emporium Centre are more than 50 and 35 years old, respectively.
“Keys for strong properties are high foot traffic, and we have generally found that retail properties have performed better in areas with high and growing income levels while retailers marketing to lower-income shoppers are increasingly struggling for consumer demand,” Yue said.
In contrast, older properties “in less desirable areas, or those overly reliant on struggling consumers, face challenges,” she wrote.
Properties with essential services and experiential retail have recovered faster, while those lacking investment or flexibility have been slower to rebound postpandemic.
