New owners are taking over Delaware’s Concord Mall after longtime owners, Allied Properties, ceased renovation plans and walked away from the property. As a result, an investment firm specializing in distressed malls bought the property from the mall’s lender. In light of the news, Delaware Public Media turned to Partner Victor Sahn to discuss why malls are in distress.
“It’s a harbinger of things to come because of the extreme hardship that is being suffered by retail. The mall is still the mall but its value has declined based on lower revenues due to vacancies,” commented Sahn.
The mall was purchased at a price below the existing secured debt, demonstrating the extreme economic duress that mall operators face in today’s retail environment. The more successful mall operators have begun providing financing to their own tenants in order to maintain them as ongoing property occupants, selling off parcels or mall land, or waiting for developers to purchase potential land at a premium price.
Sahn adds, “A lender does not want to foreclose, own and operate a mall. The lender wants to recoup as much of its investment as possible and move on.”
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