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Not a good sign: McKinley Mall's loan is delinquent

The $35.4 million loan on the McKinley Mall is officially delinquent.

The mall's owner is 30 days late with its loan payment according to analytics firm Trepp.

The same loan was sent to a special servicer in April after being deemed at risk of imminent monetary default in a special bulletin issued by Fitch Ratings, a national debt research firm. The loan is set to mature in 2023.

The mall's occupancy has taken a major hit. Both its Macy's anchor and its Macy's Home store have closed, and Bon-Ton, which accounts for 13.4 percent of the collateral space, is in the process of closing now.

Ulta, which occupied high-profile space facing McKinley Parkway, recently vacated in favor of Quaker Crossing. A string of smaller stores have gone dark as well, with Prima Oliva being the latest to announce its imminent departure.

Sears, the mall's biggest remaining tenant, occupies 146,577 square feet, or 20.1 percent of the shopping center's total space. But Sears, too, has been struggling, with plans to close 63 stores in other locations on the heels of worse-than-expected first-quarter earnings. The company reported a net loss of $424 million, with revenue dropping more than 30 percent to $2.9 billion and same-store sales down by 13 percent.

McKinley's other major tenants include J.C. Penney, taking up almost 15 percent of the mall's space,  Best Buy with 4.6 percent and Barnes & Noble with 4 percent, Trepp noted.

The mall, built in 1986 and renovated in 2008, was 96 percent occupied, excluding the two vacant Macy's stores, at the end of last year, according to Trepp data. The Macy's stores were not included in the occupancy calculation because they are owned by Benderson Development Co. and are not part of the collateral behind the loans.

The property was appraised at $56.5 million, so the mall's owner, Stoltz Management of Delaware, took out two loans in July 2013, refinancing a prior $33.3 million loan balance. One of the new loans was for $28 million, now down to $26 million; the other was $10 million, now down to $9.3 million. Both had interest rates of 4.79 percent. Both were packaged with other loans and sold to investors on Wall Street as part of separate securities.

Trepp said only the smaller loan was delinquent, although it expected the larger loan also to be classified as being late once more data is released.

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