The McKinley Mall has slid further into decline.
The mall's collateral value has been reduced again, this time to $11.5 million, according to real estate advisory firm Trepp, which cited May servicer data.
That's a long way down from the $56.5 million it was appraised at just six years ago.
The mall serves as collateral behind a $34.6 million loan that was secured in 2014 by Delaware-based owner Stoltz Management during a refinancing. The value was reduced to $15 million last fall.
Why does the new, lower value matter?
It gives a snapshot of the mall's health, which is not a pretty picture. The new value reflects recent tenant departures and leasing turnover.
It could affect a potential buyer's decision to purchase the mall or how much it might sell for.
It is also an indicator of how much Wells Fargo, the mall's major loan servicer, feels the loan would sell for if it were to be purchased right now. The lower valuation could diminish the return for which the loan is sold.
The loan was sent to a special servicer in March 2018 and became delinquent soon after. It had been appraised for $56.5 million in 2013, then slashed by 75 percent in October 2018.
Like many other midrange enclosed shopping centers across the country, McKinley Mall has become less valuable after losing major anchor tenants, attracting fewer shoppers and generating less revenue.
It can create a downward spiral, with each store closure making another one more likely. It also makes it harder for mall management to renegotiate merchant leases at favorable prices.
Anchor store Macy's and a Macy's Home store both closed in 2016. Ulta Beauty, a popular cosmetics retailer with highly visible space facing McKinley Parkway, moved to Quaker Crossing in Orchard Park last year. Bon-Ton, which filled 13.4 percent of the space behind the loan, closed in August. Other so-called "inline" stores have also closed, whether due to national bankruptcies or lack of local traffic and sales.
In terms of what's left, beleaguered department store Sears is the mall's largest tenant, occupying a fifth of the mall, according to numbers from Trepp. The McKinley location is the last remaining Sears in the Western New York market. Sears' lease is up in September 2020. The J.C. Penney department store occupies nearly 15 percent of the mall's net rentable space.
The parts of the mall behind the loan were 80% occupied at the end of 2018.