Destiny USA, one of the largest shopping malls in the country, continues to struggle to stay afloat.
Pyramid Management Group, the owners of both department stores, may soon stop being the owners of these valuable real states.
Destiny USA’s first years
First known as Carousel Center, this massive department store was first opened in 1990 in Syracuse, New York. It had 1.5 million square feet in retail space, with 1 million destined for leasable areas, and held 80 stores.
It was the fourth biggest department store in the country, only surpassed by South Coast Plaza in Costa Mesa, California (with 2.8M feet), King of Prussia Mall in Pennsylvania (who also had 2.8M feet), and Galleria at Tyler in Riverside, California (1.2M feet). The title of biggest mall was claimed by the Mall of America in Bloomington, Minnesota two years later.
With 2.8 million square feet of retail space (and 5.6 million square feet overall), this massive shopping mall became the #1 in American shopping spaces.
In 1998, Pyramid Management Group opened a second shopping mall. Palisades Center was inaugurated in West Nyack (near New York City). Apart from their stores, Palisades Center features a massive AMC movie theather with 21 screening rooms, an ice rink and even a Ferris wheel.
Pyramid Management Group after the 90s
With the rise of e-commerce and shift of consumers preferences, foot traffic in shopping malls drastically dropped. To attract back customers, Pyramid decided to get a $430 million mortgage in two separe loans: $300 millions were destined to maintain the original part of their installations, and the remaining $130 were allocated to expand their business.
Two years later, in 2016, Pyramid Management Group borrowed $418.5 million JPMorgan Chase and Barclays using Palisades Center as a collateral. The shopping mall was praised to have a $881 million value as commercial real state. However, his loan wasn’t held by the banks for long; they sold it to investors as part of a group of loans called commercial mortgage-backed securities (CMBS).
Surviving the 2020’s economic crisis
During 2020, Pyramid was facing financial trouble, so they made a deal with their lenders. Under this new deal, the lenders took control of all rent money collected from stores in the Palisades Center. Pyramid could only use this money for necessary expenses to keep the mall running, but they couldn’t freely access the funds for anything beyond essential costs.
In April 2021, the mortgage on the Palisades Center was due, meaning Pyramid was supposed to make a final payment to pay off the loan. However, Pyramid couldn’t make the payment. Instead of forcing immediate action, the lenders extended the loan’s due date to 2022, giving Pyramid more time to pay.
However, Palisade failed to make the payment a year later. As a result, Wilmington Trust, representing the investors who bought into the loan (the CMBS holders), filed for foreclosure on the Palisades Center. This action meant they aimed to take ownership of the mall to recover the unpaid debt.
This year, on August 12, a judge decided to appoint a receiver to take over the management of Palisades Center. This meant Pyramid lost control of running the mall. The receiver’s job was to operate the mall and manage its revenue with the goal of eventually selling the property to pay off the debts owed by Pyramid.
In September 2024, the company managing the loan decided to end an agreement that had been giving Destiny USA extra time to pay. Now, the loan manager is planning to take steps to get the money back, which might mean foreclosing on the mall (taking ownership to pay off the debt) if Destiny USA can’t catch up on payments. As of October 2024, Destiny USA had dropped in value: from $710 million in 2014, it has recently been praised for only $65.3 million.
Pyramid’s CEO, Stephen Congel, is trying to work out a deal with lenders to keep control of both Palisades Center and Destiny USA malls. However, since foreclosure is already in progress, there’s a real risk that Pyramid could lose both malls, meaning other owners might take over if the debts aren’t settled.
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