Positive indicators show an encouraging future towards CMBS mall loans. CMBS Remittance Comments show optimism for malls according to Trepp.
“Special Servicer has been successful with numerous tenants now renewing their leases at market rents with little or no tenant improvement allowances. The receiver. By the way, is Spinoso Real Estate. And to me, that’s a green shoot,” Manus Clancy, TreppWire Podcast
In a recent podcast (The TreppWire Podcast Episode 211. Multifamily Comps Galore; Retail Earnings Concerns; Interest Rates Level Off Ahead of Fed Talk) discussing the state of the retail and commercial real estate industry, several key points were raised, including notable mentions of Spinoso Real Estate Group.
In a related report, Trepp’s Manus Clancy noted a few malls with CMBD remittances and their plans for the future:
- Cottonwood Mall in Albuquerque NM (Leased and managed by SREG) has notable lease renewals, while getting temporary tenants to convert to permanent. In the central section, occupancy is up to 90.97%, growing overall occupancy to 84.26%. The receiver also said that it is addressing leases that will expire in the next 12 months.
- The Shoppes at Buckland Hills in Manchester, Connecticut (Leased and managed by SREG) has continued to improve the conversion of temporary tenants to permanent leases, as well as new lease signings.
- Glenbrook Square Mall loan (Leased and managed by SREG), where the receiver has been successfully working to maintain tenancy and attract new tenants to the Property. These efforts have proven successful with numerous tenants now renewing their leases at market rents and with little or no tenant improvement allowances.
“Glenbrook Square property, which is in Indiana. This particular property has been in and out of delinquency for a long time,” said Manus Clancy, Senior Managing Director, “And what I found this week with the Special Servicer Notes is that the receiver who was put in a couple of years ago, and these are quotes from the Special Servicer has been successful with numerous tenants now renewing their leases at market rents with little or no tenant improvement allowances. The receiver by the way, is Spinoso Real Estate. And to me, that’s a “green shoot.”
Foot traffic reports from Placer.ai data have been positive over the last few months. In July, malls have seen longer visitor stays as well.
“We don’t talk about really detailed green shoots with a lot of these malls very often,” added ,” said Manus, “But I did see five or six of these this month and I’m eager to get them out for people to see that not everything is negative. I’ll talk about one more that came out as well. This was from the Cottonwood Mall in Albuquerque, New Mexico. They reported that the 2022 average sales for the collateral for year ending 2022 was just under $400 a square foot for inline tenants. Why is that important? Why is that a good metric? Researchers at banks and researchers at money managers have often called the dividing line between failure and success. At a mall at somewhere between $300 and $350 a square foot for the inline tenants. When you get below $350, you get nervous. When you get below 300, often you’re talking about dead mall talking. In the case of the Cottonwood, they’re now saying that this is close to $400, which is well above viable, and that seems to be looking in the right direction.”
Mall loans are displaying enhanced property performance and increased occupancy rates, giving rise to a sense of optimism. Even those mall loans currently under special servicing are indicating progress in their journey toward refinancing. These developments signify that, despite ongoing challenges, there are encouraging advancements in the realm of CMBS mall loans, providing a glimmer of hope for investors and stakeholders within this ever-changing market.
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