As negotiations continue with the city for the sale of excess land around Stony Point Fashion Park, a loan backed by the Southside mall has slipped into delinquency.
Starwood Retail Partners, owner of Stony Point since 2014, has missed its last two payments on the debt secured by the nearly 700,000-square-foot property, as well as two other malls in Texas and Michigan, according to Trepp, a commercial real estate tracking firm.
While foreclosure isn’t imminent, the missed payments have triggered initial steps by the loan servicer to keep a closer watch on its status and the borrower’s intentions.
Starwood, which bought Stony Point from its original developer for $72 million, said in an emailed statement Wednesday, “We are actively working to extend and restructure our financing at Stony Point Fashion Park.
“In the interim, it is business as usual at the property,” a mall spokesman said.
Trepp’s findings, first reported by the Times-Dispatch, show Starwood fell behind on the loan for the first time in December, a month after the original five-year, $161 million loan matured to a balloon payment and a balance of $131 million.
The other malls secured by the loan are Starwood’s Shops at Willow Bend in Plano, Texas, and Fairlane Town Center in Dearborn, Michigan.
The balance of the loan allocated to Stony Point is $30.27 million, according to Trepp.
Opening for business in 2003, Stony Point has struggled to find its footing in recent years in the face of a changing retail industry and the struggle of many malls generally. That’s despite tenants such as Saks, Cinebistro, Dillards and Brooks Brothers.
Stony Point’s revenue has been on the decline in the last several years, Trepp found. The mall produced $9.16 million in total revenue in 2018, down 2 percent from 2017 and down 6 percent from 2016.
With steady expenses of nearly $7 million annually, Stony Point was left with net operating income of $2.42 million in 2018, according to Trepp.
Stony Point opened the same year as its main local rival, Short Pump Town Center.
Trepp said the loan on the three Starwood malls has yet to be transferred to a so-called special servicer, firms that are typically hired by lenders when a loan is in trouble to help renegotiate the terms, or potentially pursue foreclosure or a deed in lieu of foreclosure. The latter was the fate that befell Regency Square mall in Henrico, when two local developers bought it in 2015 as it was headed to foreclosure.
The loan issues at Stony Point coincide with Starwood’s ongoing negotiations to purchase around 3 acres of land surrounding the mall that’s currently home to a parking lot and is owned by the city’s Economic Development Authority.
The deal was brought up at the EDA’s meeting this week, at which Leonard Sledge, director of the city’s Department of Economic Development, told the authority that discussions about the sale of acreage are wrapping up.
“We’ve been working in earnest with (Stony Point’s) legal counsel and representatives,” Sledge said. “We hope to have something in place for EDA approval, only to go to City Council for their approval, by the next meeting.”
Neither the EDA nor Starwood has said what the land would be used for.
A Starwood spokeswoman said in July, “We had the rights under our agreement with the city to purchase the land and we have chosen at this time to enact on that agreement. As the retail environment evolves, so will we.”