A 1.8M SF outlet mall that was passed back to debtholders by owners Simon Property Group this summer was put in the hands of a new special servicer Tuesday, Bisnow has learned.
Greystone Servicing Corp. has been brought in to manage and resolve $290M in securitized debt tied to the massive Philadelphia Mills outlet mall, according to a source with knowledge and confirmed by Morningstar Credit online records. Opex Management is the receiver actively managing the property.
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Simon, America’s largest mall owner, handed over the keys to its signature Northeast Philadelphia location to holders of its CMBS debt this summer. The debt is divided into four primary notes that had been set to mature in June, Bisnow previously reported. Prior to that, Simon extended its debt maturity at least twice, according to Morningstar Credit Vice President Jonathan Ramel.
Greenwich Capital originated the loan for the property in 2007.
But Philadelphia Mills has struggled with cash flow and vacancy issues for years, first falling into receivership in 2012 after occupancy dipped down below 82%.
Two anchor tenant leases were set to expire imminently when Simon turned the property over to its lender, including Burlington's 129K SF lease, which ended in August. AMC Theatres' 68K SF deal will expire by the end of the year, and Marshalls 70K SF lease will expire next year.
As of Sept. 1, Burlington was set to vacate and take up a smaller footprint, though a replacement tenant was in negotiations for its space, according to servicer notes on the Morningstar platform. At that time, notes indicated Simon had asked that the property be transferred back to noteholders and resolution strategies were being evaluated.
Those strategies could include selling the center or continuing to operate it as a going concern, with a decision expected to come over the next several quarters.
Before Burlington’s departure, the outlet center was 89% occupied.
Philadelphia Mills, located just west of Interstate 95 off Woodhaven Road, opened as Franklin Mills in 1989 and was owned by Mills Corp. A joint venture between Simon and investment firm Farallon Capital Management acquired the property in 2007 and rebranded it in 2014, the same year it underwent a major renovation.
“I covered this in 2007, and this mall, when it went through its first iteration and it lost some big tenants, it was able to recover,” Ramel said in July. “But in this time and day, it might be much more challenging.”
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