June 23, 2016
Malls have taken a hit in recent years. It seems, however, as though there might be more problems ahead for this sector. One such issue is the ability of mall owners to refinance their loans.
But many of the mall refinance loans issued in the aftermath of the Great Recession will mature within the next 18-24 months. The bankruptcy filings of many retail chains, combined with global uncertainty, could mean a tighter CMBS market, through which many malls are financed.
According to Charles Tatelbaum with Tripp Scott PA, the pieces are in place for a “death spiral” for many older malls, as well as smaller ones. As such, he suggests that collateralized loan package investors and retail-focused REITs be cautious when it comes to such investments.