Garnet Capital Advisors Blog

Investors in mall loans might find it challenging to bring themselves to look at the state of their portfolio as it stands now. This is because those nonperforming loans are in a severely damaged state as things stand right now. Properties that boasted of values north of $100 million are now selling off for pennies on the dollar. This is precisely what happened to Crystal Mall in Connecticut. In 2012, the mall's value was at $150 million. However, it recently sold for just $9.5 million. 

Malls Are Among the Most Distressed Commercial Properties

Mall traffic continues to fall. Recent statistics indicated that mall traffic was down 12.2% in May 2023 compared to May 2022. This marked the fourth straight month that mall traffic declined year-over-year. Consumers have more options for shopping than ever before. Plenty are taking advantage of the various options available to them. As such, mall traffic continues to spiral downward in most parts of the country. 

Banks and other lenders that hold the loans on these distressed commercial properties are understandably concerned. They may have the option to restructure the loan and work out a new payment plan with the borrower. However, this can be extremely time-consuming and there are still no guarantees. Instead of doing that, a better option for many lenders is to simply sell the distressed loans that they have issued to willing buyers who will pay them a set amount to take over the loan today. 

Selling Nonperforming Loans to Focus on More Profitable Lending

In many cases, a lender will ultimately do better by selling the distressed or nonperforming loans that they own now. This will allow them to free up their balance sheet and focus on the other loans within their portfolio that are doing well. That can prove to be a more profitable strategy. It means that the lender is harnessing their attention on the things that will provide the portfolio with a net benefit. 

Mall loans were once a great product that could be reliably counted on to produce a profit. However, that is simply not the case anymore. People just don't want to shop in malls as much as they did before. This means that the retailers that operate within those locations are not pulling in as much profit as before. This means they can't necessarily keep up with the rent that they must pay for those spaces. That leads to the mall itself not being able to keep up with its bills. The loans borrowed by that mall suddenly become a much riskier proposition than they might have been before. 

Working With Garnet Capital Advisors Can Help You Sell Your Nonperforming Loans

It is not all gloom and doom for those holding mall loans. There are still many willing buyers for these distressed loans. It is still a seller's market for distressed assets. If you call Garnet Capital and speak with us about your portfolio of mall loans, we can begin to get a better picture of the types of buyers who might step up and be willing to snap up the types of loans that you possess. 

No matter how your portfolio of loans is performing now, it is always wise to conduct a complete review of them from time to time. You need to assess the risk factors related to holding on to those loans. It may be best to unburden yourself from the loans that simply aren't cutting it for you any longer. This can put you in a position to focus more on the loans that are improving your portfolio, and that will ultimately net you a healthier profit in the long run. Reach out and contact us to learn about how we can help match you up with the buyers you need.