Syracuse, N.Y. — Destiny USA, one of the largest malls in the nation, is struggling to pay its mortgage, according to a published report.
The Wall Street Journal said Tuesday the Syracuse shopping mall’s mortgage was recently taken over by a special servicer, a company that deals with defaults or renegotiations of loan terms. The servicer said it expects the mall’s owner, Pyramid Management Group, to default on the mortgage when it comes due in June, the newspaper said.
Pyramid has two mortgages on the 2.4 million-square-foot mall totaling $430 million, according to the report.
A Pyramid representative told the newspaper it is now in discussions for an extension on its mortgage. The representative said the mall had experienced tenant closures “just as other properties across the country have on the brick and mortar front,” according to the report.
Destiny USA’s financial struggles were reported as part of a larger story about the challenges that shopping malls are facing as major retail chains close stores.
Commercial Real Estate Direct reported March 28 that “weakening collateral cash flows” and the pending maturity date of the mall’s mortgage prompted the transfer of the mortgage to special servicer Wells Fargo Bank.
Pyramid said it played a role in getting the loan transferred because it did not expect to retire the loan in June, according to the March report. The same publication reported in 2018 that the mall had seen net cash flow decline by nearly 10 percent since 2014.
The mall’s loans consist of two, non-recourse, mortgage loans. According to the Kroll Bond Rating Agency, the first of the two loans has a balance of $300 million and is secured by a mortgage on approximately 1.2 million of the 1.5 million square feet of space that comprises Phase I of the mall, formerly known as Carousel Center.
The second mortgage loan has a balance of $130 million and is secured by a mortgage on an 874,200-square-foot expansion parcel, which comprises the entire Phase II of the property. After the second phase’s construction a decade ago, the mall was renamed Destiny USA.
The original section of the mall has three traditional anchor stores — Macy’s, JCPenney and Lord & Taylor. The JCPenney store is part of the loan collateral, while Lord & Taylor and Macy’s own their own stores.
The mall’s expanded section is primarily comprised of outlet retailers, restaurants and entertainment venues, according to Kroll’s report. They include Dick’s Sporting Goods; RPM Raceway, an indoor go kart track; and Wonderworks, an interactive science attraction.