The last time a big loan came due on one of Taubman Centers’ Richmond area malls, the company ended up turning over the keys to its lender.
Now the Michigan-based REIT has another large deadline approaching, with a loan of almost $100 million on Stony Point Fashion Park coming due this summer.
The loan, backed by the 343,000-square-foot property, will mature in June and comes as the Southside mall has struggled to produce income commensurate with its annual loan payments over the past five years, according to a report published by real estate tracking firm Trepp.
Stony Point’s loan, which was originally for $115 million, is an interest-only balloon mortgage, meaning the debtor is not required to pay down the principal until near the loan’s maturity. The borrower then typically refinances the debt.
“We do this all the time. This is like any other project,” Taubman development director Nico Schultz said in December. “Centers have loans, and when they come due, we work to refinance with existing or new lenders.”
But with a balance of $99.7 million as of November 2013, Stony Point isn’t producing the revenue figures it did when Goldman Sachs issued the property’s initial loan in 2004, according to Trepp reports. The mall’s net cash flow for 2012 was about $7.6 million, up from $7.3 million in 2011 but down from $11.36 million at the mortgage’s origination, the reports show. The property was most recently assessed at $60.5 million, according to city records.
Stony Point was added to Trepp’s watch list in 2009, when the property’s debt service coverage ratio – a measure of a property’s operating income divided by its debt service payment – fell to 1.02.