(TJV NEWS) Destiny USA, the largest mall in New York and one of the largest in the U.S., has defaulted on a significant $300 million mortgage, as reported by Syracuse.com.

The mall’s owner, Carousel Center Co., was unable to secure an extension for the loan when it matured on June 6 of last year, according to recent financial filings. The report states that after missing the opportunity to extend the loan, Destiny USA’s mortgage has now gone into default, with the outstanding balance, which totals $325.2 million (including $25.2 million in deferred interest), becoming immediately due. This information comes from an independent audit cited by Syracuse.com.

The lender has also ended the forbearance agreement, which increases the possibility of foreclosure, a fate that also befell two other malls owned by Pyramid last year. In response, Pyramid is reportedly in discussions to extend the loan until December 6, 2025, in exchange for a $1.1 million “consent fee,” though auditors caution that the outcome remains uncertain. As Syracuse.com points out, there are concerns about Pyramid’s ability to continue operating under these conditions.

Pyramid initially took out the loan from JPMorgan Chase back in 2014 to finance Destiny USA’s expansion. However, the company has only managed to make interest payments, failing to refinance or repay the principal, largely due to the mall’s decreasing value, a result of retail closures and the growing shift to online shopping.

As noted by Syracuse.com, the current situation reflects a broader trend of commercial real estate struggles. Recently, commercial real estate bonds, particularly those linked to mortgages like commercial mortgage-backed securities (CMBS), have faced increasing distress. By the end of 2024, commercial real estate bonds had reached record distress levels, surpassing previous figures from Q3 2024. In particular, loans on office properties are now showing a distress rate of over 17%, while apartment loan distress has also accelerated, hitting 12.5%. The report further highlights that short-term, floating-rate commercial real estate loans are even worse off than their long-term, fixed-rate counterparts.

These developments point to significant financial instability within the commercial real estate sector, which will likely continue to impact malls like Destiny USA.