Is Providence Place mall in financial trouble? Why recent filings raise questions.
PROVIDENCE − The owner of the Providence Place mall fell behind on their mortgage in 2021. Now, it appears their loan is again in trouble, as it has been transferred to a special servicer specializing in defaulted loans.
The firm Trepp reported on April 19 that the $255 million loan for the mall was transferred because of its "imminent maturity default." The loan will go into maturity default in May, according to the report.
A maturity default happens when a borrower can't refinance the loan, leaving them with a lump sum or "balloon" payment on the principal that is due – usually a sizeable amount of money.
Background: Brookfield Properties was granted two extensions on Providence Place mortgage
The Providence Place mall owner, Brookfield Properties, fell behind on its mortgage in 2021. It refinanced the maturity date to 2022 with two one-year extensions. Both of those extensions were exercised, leaving the loan to mature next month, Fitch Ratings reported.
The company that owns the mall, Brookfield Properties, a subsidiary of the publicly traded Brookfield Corporation (ticker BN), did not respond to requests for comment.
Wells Fargo is the special servicer for the loan. A special servicer manages securitized loans that are in default.
How do the mall's financials look?
Mall occupancy in July 2023 was 84%, in line with the same rate going back to 2021. However, cash flow in 2022 fell 9% from 2021 levels and is 40% lower than pre-pandemic levels, Fitch Ratings reported in 2023. The net cash flow reported was $31.7 million.
In 2022, Fitch Ratings reported that the property's net cash flow in 2021 was 17% below cash flow levels in 2020.
In 2023, Fitch Ratings reported that the mall has had "continued performance declines and weaker market fundamentals."
Tenants with leases expiring in the next few years include:
Showcase Cinemas in January 2026
Dave and Buster's this December
Zara in October 2025
When the lease for Macy's ends is not listed, but the company plans to close 30% of its locations.
One recent addition to the mall is Level99, an entertainment center with puzzles and games. It occupies 40,000 square feet of former tenant JCPenney.
Providence Place wants new tax breaks as bill is set to soar
In 2022, Brookfield Properties sought a new tax deal from the city. The current tax deal is set to expire in 2028 and if they don't get a new tax break, their bill will rise from an estimated $1 million a year to $25 million per year.
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Reporter Patrick Anderson contributed to this story. Reach reporter Wheeler Cowperthwaite at wcowperthwaite@providencejournal.com or follow him on Twitter @WheelerReporter.
This article originally appeared on The Providence Journal: Is Providence Place mall in trouble? What recent loan filings tell us.
