Who’s Financing All These Regional Malls?

Tim Milazzo
November 26, 2017

Amazon is killing retail. Amazon is not killing retail.

No matter which theory you subscribe to, the truth is that physical retail still exists in many, varied flavors, and will for a long time.

Another common industry talking point is that you should be careful of certain types of retail. Sometimes the “regional mall” is picked on in industry conversations.

So where is the financing coming from for regional malls these days?

As we often do when we’re curious about these types of trends, we turned to Reonomy, which let us whittle down our search to “Regional Shopping Centers and Anchored Malls” that have received $1 Million+ of new financing in the past year, a sample set of 300+ property loans.

Regional Mall = Regional Lender?

If you’re trying to finance a regional mall, in-region lenders are not automatically your best bet.

The sample we used was nearly split between in-state and out-of-state banks as the top capital sources. Life insurance companies were another strong source of capital, with most coming from out of state to originate regional shopping center loans.

If not here, then where?

If the loan didn’t come from a lender in the same state as the property, where was the loan most likely to come from?

No surprise that New York and California top the list here, as institutions from each state generally have an outsized impact on commercial lending nationwide. Also, many sponsors reside in New York or Cali, and may bring their own local lender relationship with them to these deals.

Foreign Banks

The international banks investing in the debt of US regional malls are decidely familiar names like TD Bank, Credit Suisse, Deutsche, and UBS, who you probably don’t think of as foreign due to their big US presence. There are a few diamonds in the rough though. For instance, the Bank of Guam originated a $1.6 Million loan on California retail in May. We’d love to hear the story if you had a hand in originating that deal!

The Leaders

Lending institutions we see taking a strong position in regional shopping centers across the country include:

In total we counted around 200 lenders for this property type in the last year or so, so there’s definitely a long tail after the leaders. Figuring out the right lender for your own loan scenario would require adding a few more filters to get the list right — filters like deal size, specific location, etc.

Whether or not retail is dead we can’t tell you (but you can check out our quote in Bisnow’s piece below within further reading). What we can tell you is that getting regional shopping center loans is still possible and there are a lot of lenders in the game.

Further reading on Retail

  1. Is Retail Really ‘F*cked’? (Bisnow) — our quote is pretty far down the page, so Ctrl+F for “StackSource”.
  2. America’s ‘Retail Apocalypse’ Is Really Just Beginning (Bloomberg)
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