Shopping center debt includes some prominent local spots like Ala Moana
Shopping centers nationwide are still struggling from the impacts of COVID-19 and one of their challenges is large loan balances. Part of the debt on those balance sheets is a local story.
Using loan data researched by Bloomberg, Pacific Business News and its parent, American City Business Journals examined shopping centers carrying significant debt in Hawaiʻi and across the country.
In New York City alone, for example, there are 119 loans officially categorized as distressed, totaling more than $4.5 billion. In Las Vegas, there are 30 distressed loans, totaling nearly $1 billion.
No city is immune as lockdown policies of the pandemic era accelerated trends toward online shopping — and left tenant stores unable to pay rent. The data suggests not all shopping centers will survive.
Some Hawaiʻi malls are among those carrying big loans, but Honolulu-based real estate broker and appraiser Stephany Sofos says they typically have some advantages their continental U.S. peers don’t.
Hawaiʻi's regional shopping centers have essentially staked out territories in populous areas and resources, like land, are finite for new developments to challenge them.
She expects a post-COVID uptick in business but thinks malls here might actually have a tougher 2022 on the tenant side as small retailers struggle with their own losses and challenges in securing financing.
Among Hawaiʻi’s shopping centers, Ala Moana Center carries the biggest loan — $500 million, specifically for its ʻEwa expansion.
Pearlridge is carrying $225 million. Smaller centers struggle too, such as Hawaii Kai Shopping Center, currently under receivership managed by CBRE following a 2020 lawsuit between the landowner and the shopping center owner. It owes just under $27 million on a $33 million loan.