Independence Mall Loan In Default, Fitch Ratings Says

By Cece Nunn, posted Oct 8, 2014
A credit ratings and research firm said Tuesday that a $110 million loan on Independence Mall is in default. (Contributed photo)
Update: This version includes additional information about the owners of Independence Mall.

A $110 million loan on Independence Mall is in default and has been moved to a special servicer, Fitch Ratings reported this week.

The credit ratings and research firm said Tuesday the loan has been transferred to CWCapital Asset Management, citing “monetary default” as the reason.

The fact that payment was 30 days overdue on the securitized J.P. Morgan loan was highlighted in September in a report from Trepp, a company that maintains a database of securitized mortgages for the commercial real estate and banking industries.

Almost 500,000 square feet of space, which includes JC Penney, in the 1-million-square-foot mall serves as collateral for the loan, the Trepp report says. Three other anchor stores, Sears, Dillard’s and Belk, own their parcels, according to Trepp.

At 3500 Oleander Drive, Independence Mall was built in 1979 and renovated in 2001. Centro Independence, the limited liability corporation listed as the owner of 3500 Oleander Drive in New Hanover County property tax records, is the borrower entity for the $110 million loan, according to Trepp.

Trepp research says the last reported occupancy for the mall was 86 percent.

“Borrower contacted Master Servicer [Wells Fargo] in May and stated they anticipate cash flow shortfalls in August and September,” the Trepp report says.

Although the debt-service coverage ratio on the loan “improved slightly” from June to September, the Trepp report’s commentary on previous months says that the DSCR “has declined year over year due to declines in rental income and expensive reimbursements. Lower income is attributed to lower base rents for new and renewing tenants."

The borrowing entity, Centro Independence, "is owned by Centro Watt America REIT 10, Inc. (71.5%), Westfield Group entities (5.9%), Hugh McRae II (7.5%) and the Oleander Company (15.0%)," according to Trepp's loan prospectus description.

Messages left with officials at Oleander Co. on Wednesday and in previous weeks seeking comment on the loan delinquency report were not returned.
“As a matter of corporate policy, we do not comment on store occupancy or sales, or financial status,” Robyn Marano, vice president of marketing for the firm Madison Marquette, said in an email Sept. 23. Madison Marquette took over leasing and marketing for the mall in 2012.

In the same email, Marano wrote, “I can report that Independence Mall is already preparing for the holidays with the addition of several traditional seasonal tenants.”

“Go! Game, Go! Calendar and Hickory Farms will all open over the next few weeks," she wrote "Holly’s Korner Kollectibles, personalized gifts, will be back again in November as will many seasonal cart operators who offer a full selection of popular gifts ranging from women’s leggings to the new Puzzle Lamps. Forever Flawless, a new skin care store, and Joanie’s Gifts, a seasonal gift shop will also be new this holiday season.”

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