ST. LOUIS — St. Louis-area malls were already facing a challenging landscape before the pandemic. Now it seems that COVID-19 has only exacerbated conditions, accelerating what commercial real estate brokers say is a dismal future for the retail class.
Last month, the St. Louis Premium Outlets in Chesterfield and Saint Louis Galleria in Richmond Heights appeared on a financial watchlist for the first time after reporting problems related to COVID-19. That follows Tennessee-based CBL Properties' failure to make an interest payment on its debt, which puts the company at risk of losing its properties to its lender, including four malls here.
"There are not enough people who care about going to malls," Colliers Senior Vice President Alex Perez said. "The future of malls is very grim."
Both St. Louis Premium Outlets and the Galleria have loans that are backed by commercial mortgage-backed securities. Loan servicers file monthly updates to CMBS bond holders to detail challenges that may affect an owner's ability to stay current on its loan, like a loss of an anchor tenant or revenue loss due to tenants not paying rent.
For the Galleria, owner Brookfield Properties Retail Group notified KeyBank National Association, the third-party company that oversees loan payments, about "potential cash flow issues caused by the COVID-19 pandemic." Simon Property Group, which owns St. Louis Premium Outlets, is working with its lender, Column Financial, "towards possible relief solution," according to recently available financial filings.
It's not clear the extent of those malls' problems nor what solutions each owner sought or received. Spokespeople for Brookfield Properties and Simon Property Group did not respond to requests for comment.
"The pandemic accelerated the underlying fundamental problems malls have had for the last 10-15 years," said Grant Mechlin, managing director of Sansone Group's retail services. "This is another challenge for an already suffering (type) of property class."
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