Commercial-Property Foreclosures Are Poised to Rise as Covid-19 Lingers

The coronavirus pandemic came at a bad time for the Burnsville Center mall near Minneapolis. In May,

Macy’s Inc.

said it would close its store. J.C. Penney Co., which also has a store at the mall, filed for bankruptcy.

Owner

CBL & Associates Properties Inc.

risked losing the mall if it stopped making payments on the $63 million mortgage. Instead, the company overseeing

CBL’s

securitized mortgage agreed to defer payments for three months, according to the loan servicer’s commentary collected by data firm Trepp LLC.

But CBL didn’t pay off the loan after three months. Now, Burnsville Center is one of hundreds of properties across the country heading to foreclosure.

CBL didn’t respond to requests for comment.

Lenders, for the most part, were initially happy to grant debt forbearance and hope that the pandemic would end soon. But many now expect the pandemic and its aftereffects to linger for

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Harbor Group International’s Midtown retail property poised for foreclosure

Payments were due on the 10th of each month, but when HGI missed its May payment, the bank took the cash out of the reserve fund; HGI never restored the balance. Reserves are typically used to supplement mortgage payments when the borrower can’t pay the full monthly amount and must be replenished to a minimum amount depending on the size of the loan. It is a practice similar to that of residential landlords who use security deposits when tenants don’t pay rent.

May 22 CIBC let the property owner know it had defaulted, but HGI has yet to make a payment. The investment firm “lacked sufficient revenue” to make the monthly payments, according to the complaint.

“New York retail properties are facing serious challenges due to current market conditions, where rents have dropped significantly,” said Richard Litton, HGI’s president. “We believe in the long-term prospects of this property and will

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