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Boulevard Mall owner facing default on $92.4 million loan

The owner of the Boulevard Mall is expected to default on the $92.4 million loan on the Amherst property, with just three months to go before it's due in full.

The "imminent maturity default" is not expected to have a significant impact on the mall itself or any of its tenants. But it may trigger a foreclosure process that could drag on for months or longer, especially if owner Forest City Enterprises decides to fight it. And it could ultimately lead to a new owner for the region's No. 2 shopping mall.

But the payment deadline may also be the reason why Forest City put the mall up for sale in July, although the developer at the time said it just doesn't fit any longer with its real estate strategy. The mall has also faced challenges, losing some stores like Gap and Hollister and eliminating its food court, while bringing in Dick's Sporting Goods and some specialty stores.

The outside of Jainlee in the Boulevard Mall. (Samantha Christmann/Buffalo News)

The outside of Jainlee in the Boulevard Mall. (Samantha Christmann/Buffalo News)

A spokesman for Forest City could not be reached to comment.

Cleveland-based Forest City is supposed to pay off the 10-year commercial mortgage it took out on the sprawling suburban mall by Feb. 6, 2017, under the maturity terms of the original loan. But according to a notice issued by debt analysis firm Fitch Ratings, the loan was transferred on Thursday from mortgage servicer Wells Fargo & Co. to LNR Partners - the same "special servicer" that handled the default and foreclosure on One Seneca Tower. Fitch cited the imminent default.

Special servicers are responsible for handling all aspects of a troubled loan, from working with the borrower and continuing to collect on it to initiating and completing a seizure of the property to avoid or recover losses for investors.

Forest City, which has owned the 912,000-square-foot mall since it was built in 1962, took out the loan on the property in 2007. It was packaged and sold to investors by Greenwich Capital Commercial Funding Corp., now part of RBS Securities under Royal Bank of Scotland Group., although it comprises just 3.96 percent of that investment security.

The loan has not previously been in trouble, although Fitch reported that it's been under "watch" since December 2015.


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