Destiny USA, New York’s largest mall and one of the biggest in the U.S., has defaulted on a $300 million mortgage, according to Syracuse.com.
Its owner, Carousel Center Co., failed to secure an extension when the loan matured on June 6 of last year, according to recent financial filings.
The Syracuse.com report says that after failing to extend its loan maturity, Destiny USA’s $300 million mortgage is now in default, with the full balance of $325.2 million—including $25.2 million in deferred interest—immediately due, according to an independent audit.
The lender terminated its forbearance agreement, raising the threat of foreclosure, as seen with two other Pyramid-owned malls last year.
Pyramid is negotiating a deal to extend the loan to Dec. 6, 2025, in exchange for a $1.1 million “consent fee,” but auditors warn there’s no guarantee of success. As they put it: “These conditions raise substantial doubt about the company’s ability to continue as a going concern.”
Pyramid took out the loan from JPMorgan Chase in 2014 to finance Destiny USA’s expansion. It has only made interest payments and failed to refinance or repay the principal as required, due in part to the mall’s declining value amid retail closures and e-commerce growth.
Recall about a month and a half ago we highlighted that at the end of Q4 2024, commercial real estate continued to exhibit severe weakness, with commercial real estate bonds hitting record distress levels, surpassing the previous records reached in Q3 2024.
Commercial real estate bonds are just commercial real estate loans packaged into securities and sold to investors. One category of bonds, commercial mortgage-backed securities (“CMBS”), saw their distress rate increase to 10.6 percent, a fourth consecutive monthly record.
Most notably, in the CMBS category—which comprises approximately $625 billion in outstanding commercial real estate debt—loans on office properties now exhibit a distress rate above 17 percent while apartment loan distress accelerated to 12.5 percent.
While loans underlying CMBS bonds—which are generally longer-term and fixed-rate—appear woefully insolvent, another group of bonds comprising short-term floating-rate commercial real estate loans are even worse.
