By Brandon Brown | Phoenix Business Journal
Scottsdale Fashion Square, one of the premier shopping malls in the Valley, is behind on its loan payments and working with a special servicer to avoid defaulting.
The mall, like most shopping centers in the state and the country, has been under financial stress since the outbreak of COVID-19 back in March. With indoor shopping centers forced to close for a long period during the spring and then fewer people going out and shopping since, the mall’s tenants have not been able to pay rent, and then the mall itself can’t make its mortgage payments.
To add to Scottsdale Fashion Square’s problems, the mall and approximately 64 stores suffered millions of dollars worth of damage due to looting at the property on May 30.
The property is financed with commercial mortgage-backed securities. Macerich Co., the company that owns Scottsdale Fashion Square and a number of other shopping centers in the Valley, reached a deal with a special loan servicer on April 2, according to the servicer’s loan notes. The mall received a three-month deferral starting on May 6.
The documents show that Macerich was able to make agreements with lenders on 19 of its mortgage loans, deferring $47 million worth of second and third quarter debt service payments.
Macerich’s CFO, Scott Kingsmore, said on an Aug. 11 conference call with investors that the company will repay $37 million of that by the end of the year, and the rest will be repaid during the first quarter of 2021.
Just for Scottsdale Fashion Square, Macerich will be paying back more than $6.6 million in deferred loans, according to the special servicer’s notes.
Recently Macerich wrapped up a massive renovation and refresh of Scottsdale Fashion Square that cost the company upwards of $140 million. It leaned into high-end luxury retailers and restaurants, making it a destination shopping experience.
Since Covid-19 hit, some retailers and restaurants have delayed openings and some of the center’s largest tenants, including Harkins Theatres, have yet to reopen.
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