SYRACUSE, N.Y. – As the retail industry’s brick and mortar stores continue to struggle against the growing online shopping trend, commercial real estate is now facing new financial challenges.
In the wake of a recent report that DestiNY USA, a large retail complex in Upstate New York, may default on its mortgage come June, Milena Petrova, associate professor of finance at Syracuse University’s Whitman School of Management, explained what’s going on.
“This is the state of all retail in the United States; it’s not a DestiNY issue,” said Milena Petrova. “When the retail industry struggles it affects the real estate and capital markets, too.”
She said that one of the Pyramid Co.’s loans is coming to maturity in June. Typically, when a commercial loan matures, because it still has a large balance outstanding, there are two options – sell the underlying property or refinance the loan. Pyramid is not likely to sell so the refinance option is the one they’re pursuing. However, right now, capital markets are reacting adversely to what’s happening to the retail market, which makes it difficult to refinance. Thus, Pyramid is seeking to extend its current loan so they have time to wait and see if market conditions improve. It also gives them time to fill vacancies left from store closings and improve their overall profile to be more enticing to a lender, and achieve better loan terms.
According to Petrova, these kinds of financial strategies are increasingly happening across the country, as the commercial real estate industry responds to the ailing retail industry.
“DestiNY is performing very well, considering what’s happening in the country,” said Petrova. “This is due to Pyramid’s strategy to fill the space with other kinds of business, such as entertainment and restaurants, and even an athletic club.”
Overall Petrova is bullish on DestiNY and predicts it will not default. “When it becomes easy to find a parking space and crowds begin to thin out, that’s when we should be worried and I don’t see that happening anytime soon,” she said.
To request interviews or get more information:
Daryl Lovell
Media Relations Manager
Division of Marketing and Communications
T 315.443.1184 M 315.380.0206
dalovell@syr.edu | @DarylLovell
The Nancy Cantor Warehouse, 350 W. Fayette St., 2nd Fl., Syracuse, NY 13202
news.syr.edu | syracuse.edu
Syracuse University
Michael John Williams, associate professor at Syracuse University and expert on NATO, US foreign policy and international security, is available to speak to media on issues related NATO-member warplanes shotting down several Russian drones over Poland, the first time the…
Recent changes to COVID-19 vaccine eligibility, include HHS-imposed age and medical condition requirements, may jeopardize the ability of those who are most vulnerable to COVID to access the vaccine. Syracuse College of Law Professor Katherine Macfarlane, an expert in disability law…
Associate professor Laura-Anne Minkoff-Zern, a food systems scholar and human geographer at Syracuse University’s Maxwell School of Citizenship and Public Affairs, is co-author of the the forthcoming book “Will Work for Food” (UC Press). With her co-author Teresa M. Mares,…
The merger of Paramount and Skydance created a major new player in Hollywood, and the new combined company is already making a splash with its purchase of the U.S. rights to air UFC fights. But the political undertones of the…
This week, the White House announced that it was doubling tariffs to 50% on imports from India, due to the country buying oil from Russia. Reporters looking for an expert to discuss how these tariffs will impact global trade and…
If you need help with your subscription, contact sunews@syr.edu.
