The beleaguered Bangor Mall, whose fortunes soured last spring after anchor store Macy’s closed, may soon have a new owner.
Mall owner Simon Property Group of Indianapolis appears to be giving up on an $80 million loan it took out against the mall in 2007 and then defaulted on last Oct. 1.
That means LNR Partners, a Miami-based firm handling the troubled loan, could take over the mall from Simon as soon as the end of March. A foreclosure is expected in the first quarter of 2018, the commentary stated.
It’s the latest development for the troubled mall, and would put the property’s prospects in new hands for the first time in a decade.
LNR revealed Simon’s decision in a monthly commentary released Jan. 16 by Trepp, a New York-based commercial real estate data firm. LNR noted that Simon “is not interested in modifying the loan,” such as by asking the lender to extend the life of the loan or decrease payments.
“That means LNR expects to take ownership of the mall by the end of March,” said Manus Clancy, senior managing director of data and research at Trepp. “But we don’t know yet if Simon has handed over the keys to LNR.”
He said in such transactions, parties sometimes change their mind at the last minute.
In Maine foreclosures can either be done by a judicial process through the courts or a so-called strict foreclosure process. The latter is the most common method under which the lender takes possession of the property or arranges a sale.
A spokesperson for the Bangor Mall referred the Bangor Daily News to mall owner Simon Property, whose spokesman, Les Morris, declined to comment.
“The average shopper won’t notice any differences in the short term,” said Edward Dittmer, senior vice president at Morningstar Credit Ratings. “As time goes on, you may see additional store closures if the property can’t stabilize.”
Sears, another of the four anchor stores at the mall, recently announced it would close in early April, though its automotive center will continue operating. Several smaller stores also have closed, including Build-A-Bear, JB Robinson Jewelers and a Starbucks kiosk. Others closing soon are PacSun, Aerie and Charlotte Russe. It is not clear whether the closures are directly related to the problem loan.
Macy’s was sold at auction Dec. 13, 2016, but the sale still has not closed. The highest bid was for $750,000, Clancy said, but the bidder’s name hasn’t been released.
“Once LNR takes the property back [from Simon], it will do some internal analysis to see what can be done,” Dittmer said. “It will make a decision about whether to try and increase the property value or just start marketing the mall for sale.”
Dittmer said LNR may decide to put money into maintenance on the mall that has been deferred, which is usually a cost-saving move. The mall’s value dropped 77 percent to $28.9 million in an appraisal last October. It was valued at $128 million when the loan was taken out 10 years ago.
In its commentary, LNR said the mall’s building exteriors are in satisfactory condition, but the parking lot is in poor condition with cracks, potholes and faded striping. Overall, it ranked the property as being in average condition.
Follow the Bangor Daily News on Facebook for the latest Maine news.