Faced with defaulting on the $237 million loan it owes on the Walden Galleria property, the shopping center owner Pyramid Management Group has reached an agreement on a three-year extension with its lenders.
The Walden Galleria has fallen on hard times as declining shoppers in recent years due to the Covid-19 pandemic and increased online shopping create financial hurdles for the mall owner Cheektowaga.
While the Boulevard, Eastern Hills, and McKinley malls struggled with tenant departures, dismal consumer traffic, and plummeting sales, the Galleria prospered and grew. And then Covid-19 hit.
Prior to the reopening of the border with Canada, the Galleria had been hammered even more than other malls in Erie County by the pandemic, as the Canadian shoppers who made up a significant portion of its regional destination business had no been able to visit for most of the past two years.
Signs of better times for the Galleria – the region’s largest and most towering mall – had appeared this spring, with weekend hours expanding and several new businesses opening. The Galleria is still primarily occupied by shops and entertainment venues, unlike other regional malls.
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Syracuse-based Pyramid said the expansion allows the company to reinvest in the mall, ensuring its “healthy, vibrant and dominant position in Western New York.”
Malls were struggling long before Covid-19, but the virus and its fallout accelerated their decline.
Pyramid is still current on its debt, but the 10-year loan was due in May with a massive lump sum payment, and the property is now worth just $216 million – a sharp drop from the $600 million when the loan was issued and sold in 2012. Pyramid asked the repairer, KeyBank, for a five-year extension.
“The resilience and strength of the mall, along with Pyramid’s ongoing efforts to reinvent, redefine and improve the customer experience, enabled us to successfully extend the loan,” said Stephen J. Congel, CEO of Pyramid Management. Group. “We look forward to continuing this success over the next few years and remain committed to ensuring the health, vibrancy and longevity of the center for decades to come. »
Mall sales in 2020 were down 38% from just two years earlier, and profits fell by half over the same period. His finances improved somewhat in 2021, but the mall’s appraised value had been reduced by nearly two-thirds by November 2020 – putting his mortgage under water, just as it was coming due.
Pyramid was facing ‘imminent default’ on its $237.7 million mortgage, which was returned for ‘special duty’ by KeyBank for the second time in the past two years, according to commercial real estate research firm Trepp LLC. This was the second time Pyramid had asked for help. The first time was during the height of the pandemic, and the company was granted a debt payment deferral from June 2020 to December 2020.
Built in 1989, the super-regional mall has 200 stores, including an assortment of big box stores, retailers, restaurants and entertainment venues. It has over 1.6 million square feet of space and was renovated in 2008. Pyramid Management and its tenants employ approximately 4,000 people. The occupancy rate, which had fallen to 75% in 2020, rose to 90% last year.
The owner of the Cheektowaga shopping center, Pyramid Management Group, is not throwing in the towel. He asks his lenders for five more years to overcome his obstacles.
Walden Galleria recently welcomed the Urban Air Adventure Park mall, an indoor trampoline and entertainment venue; Aloha Krab, a Cajun seafood restaurant; rue21, a trendy and fast-fashion brand; Offline by Aerie, a new concept in athleisure; Cheer! Italian cuisine and Lovesac.
Discount chain Five Below, which will occupy 9,000 square feet of space on the upper level of the former Johnny Rockets, and Primark, an Irish international department store which will occupy nearly 50,000 square feet, are also planning openings. in the shopping center. .
Buffalo Next reporter Jonathan D. Epstein contributed to this report.