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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowA loan on a South Dakota shopping center owned by Simon Property Group Inc., the biggest U.S. real estate investment trust, was sent to a special servicer because default is imminent, Fitch Ratings said.
The balance of the debt on the Rushmore Mall in Rapid City is $94 million, Fitch said Tuesday. The 830,000-square-foot center was built in 1978 and renovated in 1993, data compiled by Bloomberg show.
The mall plunged in value after the 2008 financial crisis. It had an appraised value of $117.5 million in 2006 as the commercial property market was peaking and was appraised at $45 million in September 2011, according to Bloomberg data. Sears Holdings Corp. and J.C. Penney Co. are among the property’s anchor tenants, according to Simon’s website.
But Penny, which occupies 89,000 square feet, has threatened to leave the mall unless it receives a new 104,000-square-foot space at the mall. Simon has denied that request.
Simon’s revenue has been rising as demand for space in regional malls climbs. Revenue jumped 14 percent in the third quarter from a year earlier, the Indianapolis-based company reported.
Les Morris, a Simon spokesman, didn’t immediately return a voice mail or e-mail seeking comment on the Fitch listing.
Special servicers negotiate with landlords on behalf of bond investors. The Rushmore Mall loan is packaged within Banc of America Commercial Mortgage Inc. 2006-3, a commercial mortgage-backed security.
Simon owns or has stakes in 331 properties in North America and Asia.
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