Destiny USA, New York’s largest mall, defaults on $300 million mortgage

Syracuse, N.Y. – Destiny USA, the biggest shopping mall in New York and one of the largest in the U.S., has defaulted on a $300 million mortgage.

Carousel Center Co., the Pyramid Cos. entity that owns the original portion of the Syracuse mall, failed to obtain an extension of the loan’s maturity date when the mortgage came due on June 6 last year, according to the company’s latest financial statements.

As a result, the loan’s lender terminated a forbearance agreement with the company and all outstanding principal and unpaid interest became immediately due, according to an independent auditor’s report accompanying the statements.

That raises the possibility that the lender could foreclose on the mall at any time, just like lenders did to two other Pyramid malls last year.

READ MORE: What’s next for Destiny USA after mall defaults on $300 million mortgage

The independent auditor, the DiMarco, Abiusi & Pascarella accounting firm, said Pyramid is negotiating a potential modification of its loan agreement that would extend the mortgage’s maturity date to Dec. 6 of 2025 in exchange for the company’s payment of a $1.1 million “consent fee.”

However, the auditor said it could provide no assurances that the company will be successful in its negotiations. And it added this:

“These conditions raise substantial doubt about the company’s ability to continue as a going concern.”

Pyramid did not immediately respond to a request for comment on Tuesday.

The company obtained the $300 million loan from JP Morgan Chase Bank in 2014 as part of the financing of the expansion of the Carousel Center mall and the renaming of the center to Destiny USA. The loan was transferred to Wilmington Trust in 2019.

Pyramid had been required to make interest-only payments on the loan and then pay off the loan in its entirety or refinance it when its maturity date came on June 6, 2019.

But Pyramid was unable to pay off the loan or refinance it when the maturity date arrived because the mall’s market value had fallen substantially with the loss of major retailers and the rapid rise of online retailing.

The company obtained several one-year extensions of the maturity date as part of a forbearance agreement with the lender. But when the latest maturity date arrived last year, it was unable to obtain another extension because the mall failed to meet the agreement’s net operating income targets.

The balance of the loan now stands at $325.2 million, including $25.2 million of deferred interest, according to the independent auditor.

Rick Moriarty covers business news and consumer issues. Got a tip, comment or story idea? Contact him anytime: Email | X | Facebook | 315-470-3148

meet the financial performance threshold required to obtain a one-year extension of the loan’s maturity date