Major bank lenders are stepping up their financing of U.S. malls this fall, targeting elite shopping centers in Texas and Florida even as the broader retail sector gets hit with tenant bankruptcies and store closings.
Bank of America, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo have taken part in three single-property commercial mortgage-backed securities deals totaling $1.8 billion that hit the market in just the past two weeks.
The latest deals add momentum to what has already been a strong year for mall debt. Lenders have financed $7.8 billion in single-asset CMBS deals for mall properties so far this year, up from $4 billion in all of 2024, CoStar data shows. It shows that banks expect investors to be willing to buy the securities backed by these retail centers.
"Banks are willing to lend for new projects given a host of factors — increasing property values, a more lending-friendly administration, a potentially renewed focus on growth — that will be profitable," Gregory Schneider, director of commercial loan analytics at Crisil Coalition Greenwich, a provider of financial services analytics, said in an email to CoStar News.
The latest major refinancings targeted three super-regional malls, offering investors securities backed by these properties, according to CMBS deal presale reports: NorthPark Center in Dallas closed a $900 million floating-rate loan; International Plaza in Tampa, Florida, landed a $575 million loan with a 5.15% interest rate; and North Star Mall in San Antonio got a $300 million loan at 5.75%.
All three loans carry low loan-to-value ratios and strong debt service coverage, signaling lender confidence in trophy assets, according to bond rating firms Moody's Investors Service and Fitch Ratings. CoStar News reached out to the mall owners for comment but didn't hear back.
Split sector
The lending appetite for top-tier malls suggests investors see a bifurcated market, according to analysts.
Properties with luxury retailers as tenants in prime locations with strong demographics are luring financing, while weaker centers struggle, analysts say. Meanwhile, the larger U.S. retail sector is working through Chapter 11 bankruptcies this year from companies including At Home and Rite Aid that have pushed up the total amount of available space.
There have been more tenant move-outs than move-ins for two quarters in a row, according to CoStar data.
Fitch maintains a "deteriorating" outlook for retail, citing slower revenue growth, rising expenses and weaker consumer spending on discretionary items.
The financing deals parallel what has been happening in the office market, with lenders returning to back cream-of-the-crop properties that have financial performances countering struggles across the sector in recent years.
The first half of this year has shown impressive improvement that could hold through the end of the year, as the fourth quarter historically performs well, Schneider said.
High-performing malls
"We've seen a rebound in commercial real estate lending throughout the second half of 2024 and into the first half of 2025," Schneider said. "When we look at retail property lending, we see a similar pattern."
NorthPark Center in Dallas serves as collateral for a $900 million CMBS deal. The 1.9 million-square-foot mall, owned by NorthPark Center through the members of the Nasher-Haemisegger family, reported $1.41 billion in total sales last year, with non-anchor tenant sales of $1,588 per square foot, according to Fitch analysis.
The national mall average stands at $596 per square foot.
International Plaza in Tampa, owned by a joint venture of Simon Property Group's Taubman Centers and Nuveen, serves as collateral for a CMBS deal containing a $475 million portion of a $575 million loan.
The 980,000-square-foot mall has maintained 98.8% occupancy and saw sales jump 32% to $779.8 million in the 12 months through June, according to Fitch.
The mall houses Louis Vuitton, Gucci and other luxury brands that generate sales per square foot far exceeding typical retailers.
North Star Mall in San Antonio, owned by Brookfield, serves as collateral for a CMBS deal containing a $300 million loan. The 1.45 million-square-foot mall recorded $450 million in sales in 2024 while drawing 8.2 million visitors, a Moody's analysis found.