Appraisals for Independence Mall and a mall loan have both been lowered, according to the most recent update on the property's loan from a company that analyzes commercial real estate loans.
"The mall collateral is now valued at $42 million, down from the most recent appraisal of $59 million. With a new appraisal reduction being issued for the loan, the servicer has given an estimate that the loan will sell for around $28.7 million if it were to go to sale right now. This is simply an estimate from the servicer and not a prediction of any kind," wrote Sean Barrie, a research analyst with Trepp, in an email.
Trepp, a company that maintains a database of securitized mortgages for the commercial real estate and banking industries, had
reported in September 2014 that the $110 million loan on nearly 500,000 square feet of the mall at 3500 Oleander Drive in Wilmington, including JC Penney, was in default. The firm reported the latest reductions in a story included its TreppWire update on Tuesday.
The mall loan had been carrying an appraisal reduction of $61.1 million as of October, and this month, according to TreppWire, that number was pushed up to $81.3 million.
Last month and in its November update, the special servicer section of the company's report on the Independence Mall loan stated that the mall
has a potential buyer.
As in October, the November notes from the loan's special servicer say the servicer "is working with the receiver [mall operator Madison Marquette] on the sale of the asset. The property was marketed for sale and a buyer has been identified," with closing expected in the first quarter of 2017 pending court approval of the sales contract.
The notes from both months also point out that a foreclosure is being pursued at the same time in case the sale does not occur.
It is the policy of Madison Marquette not to comment on the mall's financial status.
"Sears, Belk, and Dillard's are the mall's other anchor tenants, but they are not included in the subject collateral. New leasing activity has been slow due to an adjacent power center luring potential tenants from the mall. The overall mall occupancy is 92%, but the collateral is only 83% occupied. To boot, temporary tenants comprise 11% of that figure," the TreppWire story said.
The TreppWire story also pointed out that the collateral was valued at $172 million in 2006, the year the J.P. Morgan loan originated.
Since 2014, the Trepp report special servicer notes have also continuously included descriptions of the leasing situation at the mall.
"As of 10/1/16, the overall mall occupancy is 92% while the collateral is only 83% occupied which includes approx. 11% temporary tenants," the commentary says. "Approximately 28% of the collateral GLA [Gross Leasable Area] is MTM [month-to-month] or rolls before 12/31/17. Market vacancy is currently 5%. In place rent is around $14/SF compared to market rent of $12.69/SF. SS [Special Servicer] valuation reflects a reduction from the appraisal to account for more realistic leasing assumptions and other valuation parameters."
