Southland Center mall owner defaults on $78.75 million loan

The owner of the Southland Center shopping mall in Taylor has defaulted on its commercial mortgage-backed securities loan, putting future ownership of the property on hold.

New York-based Fitch Ratings Inc. said Friday that Brookfield Properties defaulted on its July payment on a 10-year loan and was added to an index of delinquent CMBS loans.

Toronto-based Brookfield, whose website says it owns more than 200 commercial properties worldwide totaling more than 155 million square feet, has a $78.75 million loan from Barclay from 2012, according to CoStar Group Inc., a real estate company based in Washington, DC. Information service.

He owes her nearly $65.1 million, according to CoStar data.

Southland, which opened in 1970, becomes the latest regional mall to face financial difficulties in the years leading up to and during the COVID-19 pandemic.

More recently, Fairlane Town Center in Dearborn changed hands following a payment default; The Partridge Creek Mall in Clinton Township also faced CMBS debt issues and went into receivership.

The loan commentary on CoStar from June indicates that Brookfield “has indicated to MS (primary repairer) that it may be unable to repay by the due date (July 6)” and that the primary repairer is “talking to Rialto as SS (Special Repairman).”

Main repairers are usually responsible for collecting monthly payments, while special repairers are usually called in in case of default. The special servicer can determine whether to foreclose a loan or arrange for a reorganization agreement or loan modification.

CoStar says Southland’s revenue grew from $18.53 million in 2019 to $16.5 million in 2020; it fell again last year to $16 million.

However, net operating income last year fell to $8.97 million, from $5.42 million in 2020 and $7.95 million in 2019, largely due to reduced expenses. from $11 million in 2020 to $7.04 million last year, according to CoStar data.

Southland Center is 905,000 square feet and its largest tenant is JCPenney, which accounts for about 35% of net leasable area, according to CoStar. Other anchors include Best Buy, Cinemark and Macy’s.

Brookfield acquired Southland in 2016 when it bought New York-based Rouse Properties Inc., the mall’s former owner, in an all-cash transaction reportedly valued at $2.8 billion.

Messages were left for Brookfield as well as Southland chief executive Amy Jurecki on Monday afternoon.

Southland is one of four regional shopping centers built by department store company JL Hudson. Two of these shopping centers are now being redeveloped into new uses: Northland Center in Southfield, primarily as a mixed-use residence, and Eastland Center in Harper Woods, as an industrial/warehouse space.

The Northland, Southland, Eastland and Westland centers were designed by Victor Gruen.

Edwin S. Wolfe