A loan connected to the Palisades Center mall in Rockland County, New York, has been resolved with significant losses for investors. According to Morningstar Credit, lower-tier bondholders lost their entire investments and even first-priority investors experienced substantial losses. The mall’s occupancy and revenue have dropped sharply since the loan was underwritten in 2016.
The Palisades Center was developed by Pyramid Management Group in the late 1990s. In 2016, Pyramid refinanced the property with a $388.5 million loan. At that time, the mall was valued at $881 million. The loan was securitized and sold to investors.
Over time, the mall’s performance weakened. Major tenants JCPenney and Lord & Taylor closed their stores in 2017 and 2019, respectively, leaving large spaces vacant. Revenue fell from more than $80.4 million in 2016 to $61.8 million in 2022, as reported by Morningstar. Occupancy rates also declined from full capacity to 78 percent in 2022. Expenses rose from 40 percent to 60 percent of revenue by 2023.
By 2024, revenue had decreased further to under $56 million—a drop of more than 30 percent since 2016. At that point, the mall did not generate enough income to cover its debt payments. Current tenants include Home Depot, Target, BJ’s Wholesale, AMC, and Dick’s Sporting Goods.
Morningstar reports that the property’s latest appraisal is $191 million, representing a 78 percent decline in value from its 2016 estimate.
After foreclosure proceedings began and a receiver was appointed, the loan was settled this month with a loss of $231.4 million. Bondholders in Classes B, C, and D were completely wiped out. Class A investors lost about 32 percent of their value, amounting to approximately $72 million.
Pyramid Management Group has also faced other setbacks in the past year, losing two additional malls—Aviation Mall in Queensbury, New York, and Hampshire Mall in Hadley, Massachusetts—to foreclosure.
Pyramid Management Group did not immediately respond to a request for comment.
