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
On Monday, a fire broke out at the Cathedral of Notre-Dame in Paris that completely burned its spire and severely damaged much of the roof. The Paris fire chief reports the structure had been “saved and preserved as a whole,”…
Today astronomers announced today they have successfully captured the first direct visual evidence of a supermassive black hole and its shadow. Duncan Brown is the Charles Brightman Endowed Professor of Physics at Syracuse University’s College of Arts and Sciences. Brown…
President Trump has threatened to shut down the U.S.-Mexico border if Mexico doesn’t stop illegal immigrants from crossing immediately. Experts fear the potential shutdown would have major implications on trade, particularly produce items like avocados and berries. Rong Li is an…
The “bomb cyclone” that hit several Midwestern states triggered devastating flooding in most of Nebraska, leaving behind more than $1 billion worth of flood damage. Floodwaters have begun to recede in Iowa and Nebraska, while residents in northwestern Missouri are…
Today, Facebook officials reported the technical issue that triggered a widespread outage earlier this week had been fixed. The interruption also impacted Instagram, Messenger and WhatsApp, and is believed to be the biggest interruption ever for the massive social media…
If you need help with your subscription, contact sunews@syr.edu.
