Report: Regional Malls, Outlets The Highest Retail Risk Class For Lenders

A report by Integral Realty Resources shows lenders are finding regional malls and outlet centers riskier compared to other retail shopping centers.

The report puts outlet centers at the highest average interest rate spread across all LTVs, with grocery-anchored centers at the lowest on all deals except ones between 76% and 85% LTV. (People have to eat, after all.)

The difference between grocery and outlet centers maxed out at 91 bps in deals between 61% and 75% LTV.

Looking at the numbers, it's hard to question the banks' trepidation. Regional malls and outlets have been struggling, with 24 malls closing up shop since 2010 and another 60 on the brink of closing, the New York Times reports.

Investors aren't too keen on throwing money into malls, either. Regional mall cap rates dropped last year, a decline that continued into 2015. And midway through the year, all regional mall REITs—with the exception of one—were trading at a discount.

Lenders put malls as the second-riskiest site at 316 bps for deals 61% to 75% LTV, as the e-commerce boom and overbuilding has investors wondering: Is this the death of the shopping mall?

Continue reading this story with a free account

Log in or register
Sign up for more articles like this
Subscribe to Bisnow's National Newsletters
Related Stories

Stock Sell-Off, Bond Market Jitters Signal Financing Trouble For AI Data Centers

Wereldhave Sells €63M Shopping Center To French Investor

Starwood Launches Residential Land JV Targeting $1B In Annual Originations

RealPage Antitrust Case Ends With Nearly $360M In Settlements For Renters

ZOM Living Entity Files For Bankruptcy To Fund Fight To Overturn $323M Judgment

How Colliers Engineering Helped A Struggling Dam Move To The Head Of The Class

Real Estate's Bottom Rung Is Getting Harder To Reach — And Now It Wants AI Skills

Banks Are Manhattan's Latest Hot Retail Tenant

OpenAI Plans Data Center Rebrand To Make Projects Palatable To Voters

The Geo Group To Reopen 2,329-Bed Immigration Facility In Texas

Brookfield, CPP Complete $5.2B REIT Buyout, Pick Up U.S. Logistics Assets

Metropolis Is Bringing AI To The Parking Experience, And Property Owners Are Taking Notice