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September 20, 2017

Default looms for owner of Bangor Mall

The primary owner of the Bangor Mall, Simon Property Group of Indianapolis, is at risk of defaulting on an $80 million loan that dates to 2007.

The Bangor Daily News reported that Simon has made only interest payments. Lender Morgan Stanley Capital turned over the loan to a special servicer that handles troubled debts in late August.

In 2007, the mall was appraised at $128 million. A recent Morningstar Credit Ratings report valued the Bangor Mall at about half that, $66.6 million, and estimated that Simon has a 50% chance of defaulting. The mall lost one of its four anchors, Macy's, earlier this year, and the mall's occupancy rate was 88% in March, down from 98% in 2012.

In August, the trade publication Commercial Observer reported that the mall's $80 million loan had been sent to special servicing, according to an alert from Fitch Ratings.

"There's lots of risk here," Orest Mandzy, managing editor of Commercial RealEstate Direct, an industry publication, told the BDN.

LNR Partners of Miami Beach, Fla., will appraise the mall, then recommend either loan restructuring or foreclosure, the BDN reported.

Earlier this year, Bangor Mall General Manager James Gerety told Mainebiz that the mall recognizes changes in shopping trends, including the growth of e-commerce, and has been working to adapt through new concepts, like recruiting non-traditional tenants.

Macy's closed in January, leaving a 143,000-square-foot space on two floors. The three remaining anchors are J.C. Penney, Sears and Dick's Sporting Goods. But there's still some flux. Earlier this year, Sears' parent, Sears Holdings Corp., announced the closure of 42 Sears stores and 108 Kmarts, due to "continued softness in store traffic and elevated price competition." The Bangor Mall's Sears was spared, although a nearby Kmart, which is not in the Bangor Mall, was closed in April.

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