Some N.J. mall owners seek federal help and may ask for tax breaks to stay afloat
The owners of 16 New Jersey malls are sending up an SOS in the wake of the coronavirus pandemic and economic downturn.
Simon Property Group, which owns 13 malls in the state, and Pennsylvania Real Estate Investment Trust, which owns three, are both calling for federal financial help to survive a state of emergency from Gov. Phil Murphy, who closed all malls and dine-in restaurants on March 9, and similar orders nationwide.
Simon is backing a call for business interruption coverage for retailers, restaurants and landlords, according to NBC News. The coverage could pay rent for tenants and hold off creditors for landlords for up to 12 months. Simon’s malls include Gloucester Premium Outlets, Quaker Bridge and Menlo Park.
PREIT has gone a step further. It wants up to $10 million in forgivable Small Business Administration loans to keep its real estate company employees on the payroll, the Philadelphia Inquirer reported. PREIT, which has seen its stock price decline by more than 75 percent since the beginning of the year, trading below $1 on Thursday, said it may also seek tax relief from municipalities where its malls are located.
It owns the Cherry Hill, Moorestown and Cumberland malls. In an earnings call with investors earlier this year, PREIT announced a plan to sell the Moorestown Mall and lease it back. The plan was a surprise to township officials, which had already granted PREIT a tax reduction that led to a property-tax increase and was in the process of declaring the mall an area in need of redevelopment that could have triggered additional tax incentives to attract new tenants.
Requests for comment from PREIT and Simon were not immediately returned Thursday. A request for comment from Moorestown Mayor Nicole Gillespie was also not returned Thursday.
Steven Maksin says some malls are “a cancer” on communities. That’s what he called the former Burlington Center Mall shortly after he sold it for $22 million last year. It is now being redeveloped into a mixed-use site with some retail businesses in front and massive warehouses, primarily for e-commerce, in the back.
Maksin thinks this solution may be coming to a mall near you.
“We have to accept the future,” said Maksin CEO of Moonbeam Capital which still owns 10 million square feet of retail property nationwide. “It’s not about malls anymore. It’s about replacement uses of the mall properties. Those that are flexible will be happier to approve redevelopment into something better, more useful, like mixed-use.”
S&P Global Market Intelligence said that 42% of department stores nationwide are expected to default on loans over the next year, including PREIT tenants in Cherry Hill and other locations, the Inquirer reported.
“I’m not optimistic about the ones that were struggling beforehand,” said Carol Kaufman-Scarborough, a professor of marketing at the Rutgers University School of Business, Camden. “Going back to the old normal, especially with the downturn in retail, is not necessarily the best approach."
New Jersey’s death toll from the coronavirus pandemic climbed steadily on Thursday, with state officials now reporting at least 3,518 dead and 75,317 total cases, with 362 new fatalities and 4,391 new positive in the last 24 hours— the state’s largest single-day increase in cases.
This marked the third consecutive day that more than 300 new deaths were reported, though state officials have cautioned that there are some delays in confirming coronavirus in patients after they died.
Updated Apr 18, 2020; Posted Apr 18, 2020