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New England's Largest Mall Faces Looming Trouble With $505M Loan Maturing

The Natick Mall, a sprawling suburban shopping center larger than any other in the region, may run into issues this fall. 

Owner Brookfield Properties holds a $505M commercial mortgage-backed securities loan backed by a 1M SF central portion of the Natick Mall. Morningstar Credit has the loan, which matures in November, on its watchlist, and Senior Vice President David Putro said there is “lots of risk” that it could go into special servicing.

This risk comes after Wegmans closed its 134K SF store at the mall a year ago, with the popular grocery chain saying it was “unable to attract enough customers for our business model to work.”

A photo of the 2007 expansion of the Natick Mall days after the grand opening.

The grocer is still paying rent and has a lease through 2037, according to servicer commentary in Morningstar’s database, but Putro said the space being dark is one bad sign for the property.

Another is that 64 tenants at the mall have leases expiring in the next 12 months, making up about 25% of the square footage tied to the CMBS loan.

The loan was underwritten at $40.9M in net cash flow, but the property produced $32.6M last year despite being 90% leased, Putro said in an email to Bisnow. The loan was originated in 2019 by Bank of America, according to Morningstar.

“Cash flow is adequate to keep it from defaulting during the course of the loan, but refinancing it will likely be tricky,” Putro said.

Brookfield declined to comment on the mall or the loan.

The mall was built in 1966 and most recently renovated in 2017. The mall was built by businessmen William Lane, Stephen Mugar and John Brennan. It began as a single-level, 600K SF building that connected the then-anchor tenants, Filene's Basement and Sears.

In 1994, the original building was replaced by a two-level building in an effort to compete with the newer, larger malls in the area, MetroWest Daily News reported. In 2007, the mall was renamed the Natick Collection and expanded to include two new anchor tenants — a 100K SF Neiman Marcus and a 144K SF Nordstrom — and added more than 100 new storefronts, the New England Real Estate Journal reported.

The 1.7M SF mall also has a Macy’s and more than 200 other stores, making it the largest mall in New England, ahead of the 1.4M SF South Shore Plaza in Braintree. The Boston Discovery Guide calls the Natick Mall a “mammoth upscale mall,” and YouTuber FleaBitten Adventures described it as “huge!” in a 47-minute walking tour video. 

The anchor tenant spaces are owned separately from the asset that Brookfield owns with the CMBS loan. The appraised value of the 1M SF property tied to the loan is $900M, according to Morningstar Credit.

Brookfield became the owner of the mall after acquiring its prior owner, General Growth Properties, in 2018.

The Wegmans store opened in 2018 after first identifying the town as an attractive location nine years prior, according to a press release about the closing. Wegmans has another location in Chestnut Hill that sits about 12 miles away from the Natick Mall, plus additional locations in Burlington, Medford and Westwood.

The Wegmans storefront when it opened in 2018

The Natick Mall sits about 20 miles west of Boston, and the town’s residents had a median income of $133K as of July 2023, according to the Census Bureau.

Although the property could be at risk, there has been activity from other tenants.

In February, mini-golf club Puttshack opened its second Boston-area location at the mall, MetroDaily West reported. Escape room operator Level99 opened a 48K SF location in 2021, and Dave & Busters took 40K SF in 2019.

Neiman Marcus closed its two-story store at the mall in 2022, one year after selling the department store box to The Bulfinch Cos. for $12.6M, the Boston Business Journal reported.

“We are always assessing our store footprint to ensure it is optimal to enhance revenues, overall profitability, and our integrated retail strategy,” a spokesperson for Neiman Marcus said in a statement to in 2020.

The store was initially supposed to be turned into lab space, but Bulfinch moved away from those plans given the slowdown of life sciences activity.

The owner then landed a deal with a trending tenant type to fill the space: pickleball. 

In October, The Boston Globe reported that Bulfinch reached a deal with fitness operator D.J. Bosse to open a new 94K SF pickleball venue in the space. The plan was officially announced in April, along with the news that four restaurants by famous Boston chef Chris Coombs would also open on the site.

“Between Chef Coombs’ four-star fine-dining background and Bosse’s sports industry expertise, this new venture is bringing the best of their respective worlds together to offer an unparalleled experience that extends far beyond the courts,” a press release from the operators said, according to MassLive

The shuttered Neiman Marcus storefront at the Natick Mall

Bulfinch has redeveloped big-box spaces at malls across the state, the Globe reported. The former Atrium Mall in Chestnut Hill became a Life Time Center, and a former Dick’s Sporting Goods across the street from the Westgate Mall in Brockton was leased to Urban Air Adventure Park in July.

Other malls in the state have seen distress in recent years.

Massachusetts has the third most shopping centers, including shopping malls, as a percentage of its physical retail among the largest metro areas in the country, according to CoStar data from 2021. With this oversaturation, malls in the area have seen an even worse fate since the onset of the pandemic.

In April 2023, Simon Property Group's Solomon Pond Mall in Marlborough saw its valuation slashed from $200M to $30.4M. Simon had designated the mall in its “other properties” category, a designation it used for properties that were at risk of being surrendered to lenders.

Philadelphia-based Pennsylvania Real Estate Investment Trust's $53M CMBS loan on its Dartmouth Mall property in Dartmouth went into special servicing in July 2023 after the loan matured on April 1, 2023, the Boston Business Journal reported

The 470K SF Hampshire Mall in Hadley is scheduled to be auctioned off on June 20, and the holders of the property's mortgage have started foreclosure proceedings, the BBJ reported. Owner Pyramid Management Group sold a Plymouth mall property for $9M, down from the $15.3M it bought it for in a 2013 foreclosure sale.