Greenbrier Mall in foreclosure after defaulting on $62 million loan
CHESAPEAKE, Va. (WAVY) — The Greenbrier Mall is the latest regional mall on Hampton Roads to enter the foreclosure process after longtime owners defaulted on a loan balance of nearly $62 million.
CBL Properties, which has owned the majority of the nearly 900,000-square-foot mall since 2004, noted in its annual report to investors last month that the loan they secured matured in December 2019 — the date 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 flows 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 loan secured by the mall could potentially not be successfully restructured or refinanced.”
A subsequent press release said the mall was placed under receivership on March 11, meaning the asset passed into the lender’s control.
It will be the second of the area’s seven remaining specialty service regional malls currently running the show.
Nick Egelanian, the founder of SiteWorks Retail Real Estate, who has followed the demise of malls and department stores for years, said the mall as it stands is unlikely to see a revitalization.
“The shopping center has no future. The mall is disappearing,” Egelanian said.
Built in 1981, the mall operates three of its four anchor stores: JCPenney, Macy’s, and Dillard’s. Sears closed in 2018 and Plans to redevelop it with an entertainment district were scrapped lack of city support.
However, Egelanian said those stores are not top performers.
“Dillard’s isn’t going to stay in business, this store is about $12 million. It makes about third place on the market. Penney’s is the worst out there,” Egelanian said.
While the loan remaining to be repaid is nearly $62 million, Egelanian said the mall’s recent $35 million valuation could also be “junk value.”
Across the country, Indoor malls have suffered In recent years – and the pandemic has only exacerbated these problems – shoppers are choosing to shop online and at discounters rather than traditional department stores, which tend to be higher-end.
According to Egelanian, the specialty contractor now in control of the mall’s fate is CW Capital. Egelanian said their ultimate job is to maximize the mall’s capital before an eventual sale.
10 On Your Side reached out to the mall’s general manager’s office for comment on the mall’s future and was forwarded to a CBRE email address. CBRE is a global commercial real estate services company.
Our request for comment was not immediately answered.
Chesapeake Mayor Rick West said the city is aware that the mall is heading for foreclosure and hopes the three property owners could agree to an immediate sale to allow for redevelopment.
Currently, the former Sears property is owned by Seritage Growth Properties and Dillard’s owns its business.
Egelanian said a full closure of the mall could be years away, however, and that the city shouldn’t try to influence the process at this point.
“What you want, if you’re the city, is to control the country’s outcome over the long term,” Egelanian said.
In 2019, Egelanian predicted that only one of the region’s seven remaining malls would survive in its current form over the long term.
He said that retail space grew about five times faster than population growth from 1985 to 2010, and that Hampton Roads essentially 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 in the long term. Aside from minor changes in the Patrick Henry Mall in Newport News, his prediction has proven true in three years.
Since then, Norfolk’s Military Circle Mall has lost another anchor tenant and was purchased by the Norfolk Economic Development Authority with plans for a massive redevelopment currently being considered.
The MacArthur Center in Norfolk is the other mall currently in receivership.
In Virginia Beach, Pembroke Mall recently closed all but its anchor tenants to undergo a conversion to a mixed-use facility.
JCPenney’s departure from the Chesapeake Square Mall this spring left the property with three vacant anchor stores.
“By the time these were finished, it was thought that these malls would never go away. But that’s all changed,” Engelanian said.