After falling months behind on the mortgage of the Mall of America during the onset of the COVID-19 crisis, the mall’s owner has modified the terms of the $1.4 billion mortgage and is now current on the loan.
“The past ten months proved incredibly challenging for everyone,” Mall of America said in a statement Monday.
The Triple Five Group, MOA’s owner, the owner of the country’s largest mall, had first started missing mortgage payments in April after the mall had to temporarily close due to the pandemic, according to data firm Trepp, which tracks commercial mortgage-backed security loans. Following an initial grace period, the loan for the Mall of America has continued to be delinquent for months, but is now current as of December.
“Facing these unprecedented economic times, we immediately began to work with our lending partners to address the cash flow issues created by this loss of revenue,” MOA said in its statements. “We are pleased to have been able to resolve the outstanding issues to the satisfaction of all parties involved, which included a modification of the loan terms.”
The Mall of America was closed from mid March to June and has suffered from a decline in foot traffic like shopping centers across the country. More consumers have avoided visiting stores in person due to the risks of the coronavirus, many turning to online sales.
With the drop in sales at the mall, many tenants have had trouble making rent payments which has negatively affected shopping center owners. Retail tenant collections at the Mall of America hit a low of 33% in April and May, according to Trepp.
The mall also has had to lay off more than 200 employees.
In May, Mall of America representatives said the mall’s revenue had dropped 85% during the closure and that the mortgage had been submitted to a special servicer in hopes of reaching an agreement on changes to the terms of the loan.
In August, Trepp reported that the mall owners had entered into a cash management forbearance agreement, which included additional reporting requirements and monthly remittance of cash. In the months since, the mall has continued to collect past due rent as the mall discussed a longer-term resolution.
Since then, Triple Five and the special servicer have been working on the long-term resolution. According to Trepp, starting with the December payment, the loan was converted to interest-only through maturity.
Lenders have remained confident in the long-term success of the Mall of America, the mall said.
“While the coming months will continue to present unique challenges, we remain optimistic for our business and look forward to the day when we can once again welcome back visitors from around the world,” the statement said.
The pandemic exacerbated an already well underway disruption in the retail sector and pushed several large retailers, including J.C. Penney, into bankruptcy. As a result, malls also have been suffering, including Burnsville Center.
The Mall of America, one of the country’s premier shopping destinations, is in a different category because of its entertainment options and the amount of tourists it attracts, but the mall also has felt the impacts of the disruptions.