What's next for New York's Capitol Region's very first enclosed shopping mall after owners defaulted on a hefty loan? New York State residents are wondering just that after the news came out that the collateral for the loan is the central portion of the mall itself.

This isn't the first time a major New York State shopping center has faced a critical financial challenge, as just over a year ago one of the state's most popular shopping destinations, the Palisades Mall Center, had been facing foreclosure questions. Citing a decrease in shopping trends as a result of the COVID-19 pandemic, and a debt of over $415 million, investors were said to be seeking foreclosure at the Palisades Center in Rockland County back in February of 2023.

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Central Parts of Massive Albany Mall Listed as Collateral in Loan Default

According to the Albany Business Review, financial filings made to bond investors indicate that he owner of the Colonie Center has defaulted on the outstanding debt for 'much of the shopping center.'

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Initial reports detail that there was a balance of $102.9 million due on December 9, 2023, and that owner, LLC of Carlsbad California did not pay. A portion of the massive mall (which totals1.3 million square feet) was said to be collateral on the loan, and is said to include 754,000 square feet of space including major tenants like Regal Cinemas, L.L. Bean, Barnes & Noble, Nordstrom, Boscov's, and the site of the former Christmas Tree Shops.

Albany Business Review also reported that the filings stated that 'local counsel has been retained to file for foreclosure and/or receivership, if necessary, lender is currently gathering due diligence documents from borrower.'

SEE ALSO: White Plains Galleria Closes For Massive New Venture

Not The First Colonie Default

Information provided by Morningstar Credit revealed that this type of debt, CMBS defaults, are handled by a special servicer on behalf of the lenders, which are bond investors. Borrowers can get extensions to repay the balance,' which is what happened in 2019.

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Back in August of 2019, Colonie Center debt was 'transferred to special servicing after the borrower failed to pay off the loan at maturity.' Again, the same portion of the mall (listed then as 760,000 square feet) was listed as collateral and included the same large stores, plus the Christmas Tree Shops.

READ MORE: Remaining Hudson Valley Sears Locations Shutter

About The Colonie Center, Albany

Cited as the Capital Region's 2nd largest shopping area, and the distinction of the Capital Region's 'Best Of' Shopping Center for 14 straight years, the Colonie Center in Albany features more than 100 'specialty' stores, 13-screen cinemas and several other amenities.

In 2014, the property was appraised at $145 million, $97.6 million in October 2020, and this past January 2024, at $67.5 million.

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