Simon Obtains Restructuring on $291M Retail Malls Loan

By Barbra Murray, Contributing Editor

With Talmage L.L.C. acting as special servicer, the $291 million loan on the Cadillac Mills Portfolio has been modified and restructured. The portfolio encompasses three regional malls totaling 2.8 million square feet.

The three properties involved include the Galleria at White Plains in White Plains, N.Y., The Esplanade in Kenner, La., and Northpark Mall in Ridgeland, Miss. The assets became part of the holdings of Simon Property Group and Farallon Capital Management when the team acquired the Mills Corp. for approximately $1.6 billion in 2007.

But a lot has transpired in the capital markets and the commercial real estate industry since then, and in January 2012 the bank consortium that holds the private loan on the Cadillac Mills Portfolio tapped Talmage to take on the role of special servicer. Now Talmage, having completed negotiations with Simon, has orchestrated new terms for the rather sizeable loan on the portfolio. The firm arranged a three-year extension on the loan in exchange for an upfront principal payment to pay down the loan. Additionally, Talmage orchestrated an interest rate increase and a full cash flow sweep.

“By working collaboratively with the lender group and Simon, we fashioned an attractive resolution for all constituents,” said Grant G. Rogers, chief operating officer of Talmage. “The Simon team did a terrific job on the leasing front that allowed us to close the transaction.”

On a national level, there’s been progress on the loan resolution front. According to Fitch Ratings, financing resolutions outpaced commercial real estate loan collateralized debt obligation (CREL CDO) delinquencies in May, resulting in a drop in total delinquencies from 13.9 percent in April to 13 percent in May. The change was due in no small part to the extension of the Kerzner International Portfolio loan, which is secured by such premier properties as the 2,900-room Atlantis Hotel resort and the 105-room One & Only Ocean Club Hotel and golf course on Paradise Island, Bahamas.

Commercial real estate loans large and small, secured and unsecured, are all part of the upswing in modifications and restructurings. Kite Realty Group Trust recently amended the terms of its existing $200 million unsecured revolving credit facility with a consortium led by KeyBank N.A., extending the maturity date to 2016 with the option to extend for an additional year. Last month, MHI Hospitality Corp. completed a deal with TowneBank to extend the maturity date of the REIT’s $8.1 million mortgage on the 173-room Crowne Plaza Hampton Marina Hotel along the waterfront in Hampton, Va.