A multimillion-dollar loan taken out by owners of the Charleston Town Center mall is expected to immediately default when it matures today. A mall representative said the default will not affect the mall's operations.
An alert from Fitch Ratings, an international credit rating agency, shows the Charleston Town Center's loan has been transferred to a special servicing firm, citing "imminent maturity default" as the reason for the transfer. C-III Capital Partners, an asset management group, now controls the loan. A special servicing firm is a company hired to collect on mortgages that are either in default or delinquent.
The loan has a balance of almost $93.1 million, according to the Fitch alert. The original mortgage, which was taken out in September 2007, was for $100 million and had a 5.6 percent fixed interest rate, according to a report from Commercial Real Estate Direct, a news service for commercial real estate professionals.
The loan is a conduit loan, also known as a commercial mortgage-backed securities transaction. It's a type of commercial mortgage that's packaged in a pool with other loans, then sold to second-party investors.
The mall's mortgage was bundled in 2007 with loans for 216 other properties, which totaled more than $1.76 billion. The Town Center's $100 million loan was the third-largest part of that package, according to Commercial Real Estate Direct.
Officials with Forest City Enterprises, the Cleveland-based company responsible for the mall's operations, financing and other areas, did not respond to multiple interview requests this week.
Lisa McCracken, the Town Center's communications director, said the transfer won't affect business at the mall.
"As Forest City reviews options, we want to assure our guests, center businesses, and the community that Charleston Town Center will continue to operate as it always has, providing Charleston with a first-class shopping, dining and entertainment experience," she said in a statement.
McCracken directed all other inquiries about the mall's mortgage to Forest City.
The transfer of the loan comes as Forest City, one of the original owners of the Town Center mall when it opened in 1983, finalizing a deal that would allow an Australian investment company, Queensland Investment Corp., to take control of the Town Center and six other malls across the country. Queensland already owns 24 percent of the mall after a 2013 partnership with Forest City, which now owns 26 percent of the mall.
It's not clear if the defaulted loan would affect the pending sale. In her statement, McCracken said Forest City is determining the best solution for handling the mall's financing. Youngstown, Ohio-based Cafaro Co. owns the other 50 percent of the mall.
Sears, one of the original anchor stores at the mall, closed this spring. At the time, Forest City spokesman Jeff Linton said Forest City was open to consider "creative re-purposing of the store space." The space remains empty, and there has been no announcement about who might take it over.
The mall's two other anchor stores, J.C. Penney and Macy's, closed hundreds of stores throughout the country earlier this year, but have kept their Charleston stores open. The mall's fourth anchor store space is occupied by BrickStreet Insurance.
In March, Charleston Mayor Danny Jones said he and Sen. Joe Manchin, D-W.Va., were working with Macy's representatives to keep the Charleston store open.
"I've talked to the director of operations, I've talked to real estate people personally," Jones said at the time. "They'll be there at least until the end of my term, and maybe more." Jones' term ends in January 2019.
Reach Ali Schmitz at ali.schmitz@wvgazettemail.com, 304-348-4843 or follow @SchmitzMedia on Twitter.