A New York mall’s continued distress has spelled out bad news for investors.
A loan tied to the Palisades Center mall in Rockland County, New York, has been settled, but with substantial losses to securities holders. Lower classes of the bonds were wiped out entirely, and first-priority investors also saw some of their investment vanish, according to Morningstar Credit. Occupancy and revenue at the mall had declined substantially since the loan’s underwriting in 2016.
Pyramid Management Group developed the mall, located in West Nyack, New York, in the late 1990s. In 2016, the firm secured a $388.5 million refinancing against the property. That was just a fraction of the mall’s value, then estimated at $881 million, according to Morningstar.
The loan was securitized and sold to investors. But the mall couldn’t keep up its performance. JCPenney and Lord & Taylor closed their locations there in 2017 and 2019, respectively. Those anchor spaces have never been filled.
Revenue dipped precipitously during the pandemic and then failed to fully recover. The mall pulled in more than $80.4 million in 2016, but that fell to $61.8 million in 2022, according to Morningstar. Occupancy fell from 100 percent to 78 percent that same year, as the loan was transferred to special servicing for maturity and monetary default. Expenses, once 40 percent of revenue, rose to 60 percent by 2023.
The most recent data, from 2024, shows revenue has fallen more than 30 percent, to less than $56 million. At the time, the mall did not have enough revenue to cover its debt service. Current tenants in the four-story, 1.9 million-square-foot property include Home Depot, Target, BJ’s Wholesale, AMC and Dick’s Sporting Goods.
The mall was most recently appraised at $191 million, a loss of 78 percent of its value, according to Morningstar.
The servicer filed for foreclosure and was granted a receiver and summary judgment in the case.
The loan was resolved this month, after taking a $231.4 million loss. Class B, C and D bondholders were entirely wiped out. Class A lost about 32 percent of its value, to the tune of $72 million.
Pyramid Management Group has had a difficult year, beyond the Palisades Center. The company has lost two other malls to foreclosure in roughly one year: the Aviation Mall in Queensbury, New York and the Hampshire Mall in Hadley, Massachusetts, according to reporting from Syracuse.com.
Pyramid Management Group did not immediately respond to a request to comment for this story.
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