St. Cloud Mall Behind on Mortgage Payment
Another Minnesota mall has fallen behind on its mortgage payment.
On Monday, commercial real estate data firm Trepp LLC reported that the Crossroads Center mall in St. Cloud is delinquent on its $89.9 million loan. According to Trepp, the mall was marked as delinquent as of this month. This is the first time the mall has fallen behind on loan payments.
The loan’s collateral includes a JCPenney store and a Macy’s, two of the mall’s anchor tenants. In total, the loan is backed by 766,213 square feet of retail space, according to Trepp.
The mall is owned by Brookfield Properties Retail Group, which also owns Ridgedale Center in Minnetonka and the River Hills Mall in Mankato. St. Cloud’s only major mall, the Crossroads Center is the biggest shopping center outside the Twin Cities metro.
For retailers, the coronavirus pandemic has compounded a number of long-running issues. Foot traffic and sales have declined considerably since the start of the pandemic. In the second quarter of the year, retail sales dropped 8.1 percent, marking the largest decline since the 2009 financial crisis, according to commercial real estate services firm CBRE.
Even Mall of America, the nation’s largest shopping center, has also fallen behind on its mortgage payments. In August, the Bloomington mall entered a special cash-management agreement with its loan servicer to avoid foreclosure.
According to Trepp’s data, at least three other Minnesota shopping centers are delinquent on their mortgages: Shingle Creek Crossing in Brooklyn Center, Rainbow Village Minnesota in Blaine, and the North Branch Outlet Center.
Delinquency rates for commercial mortgage-backed securities — a type of loan often taken out by retail properties — have been sharply increasing since the pandemic started. As of June, the delinquency rate for retail-backed CMBS loans sat at 18.1 percent, according to Trepp. That’s almost five times the rate in April.
“Retail was a laggard even before Covid,” Trepp officials wrote in a June report. “The issue might lie in the vast quantity of space dedicated to retail in the U.S. … That coupled with an overall shift in consumer demand away from brick-and-mortar stores towards online shopping has amplified the effect of the Covid-19 crisis.”