Finance  ·  CMBS

Poughkeepsie Mall’s Valuation Sinks $169M Since 2011 Issuance

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The value of a Poughkeepsie, N.Y., mall securing two commercial mortgage-backed securities (CMBS) loans has plummeted by 71 percent since debt was issued on the property just over a decade ago, new appraisal data shows. The drop in value underscores the larger challenges faced by older malls, including vacancies and the rise of e-commerce.

The Pyramid Management Group-owned Poughkeepsie Galleria was valued at $68 million on March 17, 2023, based on updated appraisal information released in May, according to CRED iQ. The 1.2 million-square-foot regional mall in New York’s Hudson Valley backs the UBSCM 2012-C1 and UBSC 2011-C1 CMBD deals totaling $131.5 million. The 1998-built property was valued at $237 million at the time of the transaction, which was originated by UBS.

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“The updated appraisal represents a mile marker that needs to be passed to facilitate the price discovery necessary for the workout of the distressed mortgage,” said Marc McDevitt, senior managing director at CRED iQ. “The concept of a traditional regional mall with traditional department store anchors without any evolution of mixed-use utility has fallen out of favor with consumers and CRE investors, which is evidenced by [net operating income] declines and subsequent depreciated valuations exhibited in scenarios such as Poughkeepsie Galleria.” 

Two of the Poughkeepsie Galleria’s former anchor stores, Sears and JCPenney, closed in 2020 as part of the retailers’ broader efforts to close brick-and-mortar stores nationally. Some of the anchor stores still open at the mall include Macy’s, target and Best Buy.  

Syracuse, N.Y-based Pyramid and UBS did not immediately return requests for comment.

Pyramid is also confronting fiscal woes with its Destiny USA super regional mall in Syracuse, with CMBS loans backing the initial 1.2 million-square-foot property and its 872,000-square-foot expansion incurring combined appraisal reductions of more than $242 million as of November 2020, according to Trepp. The company secured a five-year extension with Wells Fargo (WFC) last year on $430 million of CMBS loans for the mall that had been set to mature in June 2022. 

Andrew Coen can be reached at acoen@commercialobserver.com