What’s next for Carolina Place mall after it defaulted on a $149 million loan?
Yet another Charlotte-area mall is in financial trouble after defaulting on its loan payment.
Carolina Place mall owner Brookfield Properties defaulted on a $149 million loan debt, according to a CMBS report provided to The Charlotte Observer by commercial real estate research group CoStar. CMBS is a commercial mortgage-backed security.
The 90-acre mall property is at N.C. Hwy. 51 and Interstate 485 in Pineville.
The loan maturity date was June 1, according to the report. A special servicer and Brookfield are in discussions to modify the loan but “no terms have been agreed upon,” according to the report.
The special servicer — Rialto Capital — is a third party that’s going to try to work out an agreement on how to move forward on the defaulted loan, said Chuck McShane, director of market analytics for CoStar.
“If that doesn’t work, it moves to receivership and foreclosure, similar to Epicentre,” McShane said. Epicentre, now called Queen City Quarter, is a mixed-use uptown Charlotte retail center that was delinquent on its $85 million loan in 2021. Following an auction in 2022, lender Deutsche Bank Trust Co. now owns the property.
Carolina Place’s original 2013 loan was for $175 million at a fixed interest rate of 3.83%, the CMBS report shows.
“You’re not going to get anywhere near that today because of the increase in interest rates,” McShane said. “So in addition to the loss of income when (anchor tenant) Sears left (in 2018), refinancing will be a lot more expensive.”
Brookfield officials did not respond to requests for comment from The Charlotte Observer.
The Charlotte Business Journal first reported about the mall’s loan default.
What happened at Carolina Place?
When Sears left Carolina Place five years ago, the occupancy dropped from full to 74%, McShane said. The Pineville location was among 142 nationwide store closures following Sears’ bankruptcy filing in 2018. Losing Sears led to lower income for the mall, McShane said.
Many national retail tenants are moving away from malls to open-air lifestyle centers, McShane said, especially at mid-level malls as compared to luxury malls and outlets.
Northlake Mall also has been struggling financially. The north Charlotte mall went into receivership in May 2021 after failing to pay its debts. Spinoso Real Estate Group of Syracuse, N.Y., which maintains and operates the mall, said in June the Northlake won’t be listed for sale until at least next year because of security concerns and interest rates.
Security also has been a concern at other area malls, including Carolina Place.
Charlotte-area malls ramp up safety after spate of gun violence. What crime trends show
Last year, a gun-sniffing dog was added to the security staff at Carolina Place.
The mall had piloted a canine program in 2021 following a shooting inside the mall between two men. Both men were injured and arrested.
And in 2019, a 24-year-old man was shot and killed by an employee at athletic apparel store DTLR following an ongoing dispute, according to The Charlotte Observer archives.
More about Carolina Place
The 1.1 million-square-foot south Charlotte mall opened in 1991 with four anchor stores, Belk, Dillard’s, JCPenney and Sears. All but Sears remain.
The top five tenants as of October are JC Penney, Barnes & Noble, Dave & Buster’s, REI and Forever 21, according to the CMBS report. The store leases for the top 5 end in early 2024 to 2033.
When Carolina Place opened in 1991, it was Mecklenburg County’s first regional mall in 16 years. But its start was slow, blamed on the recession and national retail chains’ delaying expansion plans, according to Observer archives.
The mall, which was last renovated in 2006, has 129 stores and restaurants as of Oct. 30, according to Carolina Place’s website.
Brookfield Properties manages over 100 retail properties, including North Carolina shopping centers in Durham, Greensboro, Greenville and Wilmington, according to the company website.
