A joint venture affiliate of Canadian parent company Somerset Collection Saks Fifth Avenue and Twelve Oaks Mall department store Lord & Taylor skipped debt payments last month and this month on those properties, as well as more than 30 other locations across the country. .
Payments are due for $846.2 million in overdue debt on three loans with balances of $325 million, $371.2 million and $150 million, according to data from New York-based Trepp LLC. , which tracks commercial mortgage-backed securities data.
The debt, which was transferred to the Special Service on April 23, is secured by 34 Saks Fifth Avenue and Lord & Taylor locations, including Somerset Collection and Twelve Oaks Mall stores.
Retailers have been hammered during the COVID-19 pandemic, with names like JC Penney and Neiman Marcus filing for bankruptcy protection. The retail climate had already been disrupted by e-commerce, and the global virus outbreak causing store closures crippled industry balance sheets. Earlier this month, Crain’s reported that the owner of The Mall at Partridge Creek shopping center in Clinton Township defaulted on a $725 million CMBS loan.
In 2015, parent company Saks and Ontario-based Lord & Taylor Hudson’s Bay Co. and Indianapolis-based REIT Simon Property Group (NYSE: SPG) formed a joint venture to own 42 of the retailer’s owned or leased properties valued at the time. at $1.7 billion, according to a Wall Street Journal report at the time.
The REIT paid up to $278.5 million for its 20% stake and $100 million to make store improvements.
The joint venture owns the 152,000 square foot Saks Fifth Avenue store at Somerset Collection, which accounts for $11.1 million of the $325 million loan, as well as the 121,800 square foot Lord & Taylor store at Twelve Oaks Mall, which accounts for $7.4 million of the $325 million loan, according to Trepp.
The debt is the subject of a federal lawsuit filed earlier this week in New York by Special Agent Situs, according to a Wednesday report in The Real Deal. The lawsuit claims Hudson’s Bay orchestrated a complex corporate game before going private earlier this year, a decision the company denies, according to The Real Deal. The report said the maneuver, which involved transferring ownership of properties to Bermuda-based entities, “undermined the creditworthiness of the loan.” He also says he violated the terms of the loan.
“This lawsuit is baseless and without merit,” Nicole Schoenberg, vice president of corporate communications for Hudson’s Bay, said in an emailed statement. “HBC is not a party to the CMBS facility, but rather a mere guarantor of the lease obligations under the head lease relating to the properties of a real estate joint venture. To suggest that HBC breached the terms of the loan documents is categorically false. .”
She declined to comment on the debt payments.
Somerset Collection is owned by Forbes Co., based in Southfield, while Twelve Oaks is owned by Taubman Centers Inc, based in Bloomfield Hills. Both companies declined to comment on Thursday.
Shopping centers have been closed since late March due to the COVID-19 pandemic.
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