Greenbrier Mall in foreclosure after defaulting on $62 million loan

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CHESAPEAKE, Va. (WAVY) – Greenbrier Mall has become the latest regional mall in Hampton Roads to enter the foreclosure process after longtime owners defaulted on a nearly $62 million loan balance .

CBL Properties, which has owned the majority of the nearly 900,000 square foot mall since 2004, said in its annual report to investors last month that the loan they secured matured in December 2019 — the date at which the final payment was due – and had a balance of $61.6 million as of December 31, 2021.

“The mall had experienced a decline in cash flow due to store closures and rent reductions,” CBL wrote in a section of its report measuring fair market value. “These factors resulted in a reduction in the expected holding period for this asset based on management’s assessment that there was an increased likelihood that the mall-backed loan would not be successfully restructured or refinanced. .”

A subsequent press release said the mall went into receivership on March 11, meaning the asset is moving into the control of the lender.

It becomes the second of the region’s seven remaining regional malls with special services currently running the show.

Nick Egelanian, the founder of SiteWorks Retail Real Estate, who has been tracking the fall of malls and department stores for years, said the mall is unlikely to see a revitalization in its current form.

“The shopping center has no future. The mall disappears,” Egelanian said.

The mall, which was built in 1981, has three of its four operating anchor stores: JCPenney, Macy’s and Dillard’s. Sears closed in 2018, and redevelopment plans with an entertainment district have been shelved lack of city support.

However, Egelanian said those stores aren’t the best performing.

“The Dillard’s is not going to stay in the market, this store is doing about $12 million. It’s about number three in the market. The Penney’s is the worst in the market,” Egelanian said.

While the outstanding loan is nearly $62 million, Egelanian said the mall’s most recent valuation could also be a “scrap value” of $35 million.

Across the country, indoor shopping centers suffered in recent years – and the pandemic has only exacerbated these issues – with shoppers choosing to buy online and at discount retailers rather than traditional department stores which tend to be more upscale.

According to Egelanian, the special fixer who now controls the fate of the mall is CW Capital. Egelanian said their job is ultimately to maximize the mall’s capital before a possible sale.

10 On Your Side contacted the mall’s general manager’s office for comment on the mall’s future and was directed to a CBRE email address. CBRE is a global commercial real estate services company.

Our request for comment was not immediately returned.

Chesapeake Mayor Rick West said the city is aware the mall is headed toward closure and hopes all three owners can agree to sell immediately to allow for redevelopment.

Currently, the former Sears property is owned by Seritage Growth Properties and Dillard owns his store.

However, Egelanian said a complete closure of the mall could still take years and the city should not try to influence the process at this point.

“What you want if you’re the city is to control the outcome of the land in the long run,” Egelanian said.

In 2019, Egelanian predicted that only one of the region’s seven remaining malls would survive in its current form for the long term.

He said retail space grew at about five times the rate of population growth from 1985 to 2010, and essentially Hampton Roads had too many malls for its 1.7 million residents.

He predicted that only Lynnhaven Mall in Virginia Beach would survive in its current form for the long term. Aside from minimal changes to the Patrick Henry Mall in Newport News, his prediction has proven true within three years.

Since then, the Military Circle Mall in Norfolk has lost another anchor tenant and has been purchased by the Norfolk Economic Development Authority with plans for massive redevelopment currently under consideration.

MacArthur Center in Norfolk is the other mall currently in receivership.

In Virginia Beach, Pembroke Mall recently closed all but its anchor tenants to begin a transformation into a mixed-use facility.

JCPenney’s departure this spring from Chesapeake Square Mall has left the property with three vacant anchor stores.

“It was thought at the time that it had been done, that these malls would never disappear. But everything changed,” Engelanian said.

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