Regional mall Sugarloaf Mills battles debt

3:16 PM, Oct 8, 2013   |    comments
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ATLANTA -- Another suburban Atlanta mall is battling debt problems.

Sugarloaf Mills, a regional mall at Interstate 85 and Sugarloaf Parkway in Gwinnett County, has been transferred to mortgage servicing, according to Fitch Ratings.

A $130 million mortgage tied to the mall was transferred Oct. 4 to CWCapital Asset Management. The loan was facing maturity default, according to Fitch.

Sugarloaf Mills had its roots in the big mall boom of the early 2000s, when it opened as Discover Mills, the result of a naming rights sponsorship with Discover Card.

That agreement ended last year.

It counts by Bass Pro Shops among its anchor tenants. The mall is operated by Simon Property Group.

In 2001, Discover Mills became Gwinnett County's third regional mall, along with Gwinnett Place in Duluth and Mall of Georgia in Buford. Discover Mills was also the second suburban Atlanta mall launched into the fray that year. The new Mall at Stonecrest also opened in South DeKalb.

Additional malls made it to the drawing board. Developers floated an idea for a new mall in Henry County, and others chased retailers for a proposed mall on Georgia 400.

Today, mall construction across the United States has essentially shut down, and mall operators are dealing with new pressures to keep their projects relevant. Retail is evolving due to rising e-commerce sales, and more retailers are leaving malls for street-level locations at mixed-use developments.

The results haven't been pretty.

In Duluth, the lender foreclosed last year on a $115 million loan backed by the aging suburban mall Gwinnett Place. The property now is also the hands of mortgage servicer.

This year, The Mall at Stonecrest was moved to mortgage servicing, because its ownership faced imminent default on a $98.7 million loan backed by the mall.

In Forsyth County, the nation's "most aggressive" upscale mall developer has stalled on its planned project in south Forsyth County.

Michigan-based Taubman Centers Inc. (NYSE: TCO) proposed to have more than 1 million square feet of retail, including a luxury mall with around three anchor stores.

It was set to open in phases beginning in 2011, but construction has yet to start.

Only one mall, in Salt Lake City, has been built in the United States in the past seven years, according to Reis, a real estate market research firm.

Giant mall operators like Simon and General Growth Properties Inc. (NYSE: GGP) are renovating their best centers, while letting struggling malls go. Simon no longer has an ownership stake in Gwinnett Place.

(Atlanta Business Chronicle)

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