Case Studies

Sugarloaf Mills

Orchestrating a Rebound for a Premier Atlanta Shopping Hub

Counter to protection buyers’ assertion that the only possible outcome for this defaulted high LTV loan was an accelerated foreclosure and subsequent liquidation, special servicer CW chose to modify and extend the loan—avoiding unwarranted losses for the CMBS trust and opening a path to enhanced long-term asset performance. A hyperamortization strategy has enabled Sugarloaf Mills to pay down a significant amount of debt, and the mall has proven a productive asset in a burgeoning market with an adjacent apartment complex and multiple nearby hotels in the works.

Asset

Regional mall catering to 5.6M Atlanta area residents

Location

5900 Sugarloaf Parkway
Lawrenceville, GA 30043

Ownership

Simon Property Group

Size

1.2M SF

Gallery

AMC Theatre Lobby at Sugarloaf Mills in Lawrenceville, GA

Exterior photo of Burlington Coat Factory at Sugarloaf Mills in Lawrenceville, GA

Aerial view of Sugarloaf Mills in Lawrenceville, GA

Bass Pro Shops Outdoor World at Sugarloaf Mills in Lawrenceville, GA

Aerial photo of Bass Pro Shops Outdoor World at Sugarloaf Mills in Lawrenceville, GA

Aerial photo of Medieval Times at Sugarloaf Mills in Lawrenceville, GA

Off Broadway & Forever 21 at Sugarloaf Mills in Lawrenceville, GA

Sugarloaf Mills entry sign in Lawrenceville, GA

Medieval Times at Sugarloaf Mills in Lawrenceville, GA

Main entrance at Sugarloaf Mills in Lawrenceville, GA

Dave & Buster's sign at Sugarloaf Mills in Lawrenceville, GA

2006

At loan origination, SPG secured $158.7M of debt against the mall’s appraised asset value of $210M. The debt was structured in two parts—a senior, interest-only, five-year note with a 6.08% coupon (the A note) securitized in the JPMCC 2006-LDP9 CMBS trust and a co-terminus subordinate note for $23.7M with a 7.3% coupon (the B note) held outside of the trust.

Placeholder image of several people in a meeting

2006

2011

The senior loan was transferred to a special servicer when it defaulted at maturity. To avoid a material loss to the CMBS trust, the special servicer extended the loan term from December 2011 to December 2013 and returned the loan to the master servicer. Per the modification documents, excess cash flow was to be used to pay down the principal balances on a pro rata, pari passu basis with the subordinate debt.

2011

2013

The asset had a DSCR of 1.5x but struggled to refinance at the end of its extension period. The special servicer extended the loan another five years while reducing the appraisal value from $210M to $152M.

2013

2018

The special servicer agreed to another three-year extension with a terminal date in 2021, after which time the A note is expected to have amortized down by 42% of the original balance with a terminal B note balance of $10M. The asset value would then more than adequately cover the residual loan balances. Refinancing in 2021 is probable, while additional hyperamortization extension periods are another possibility.

2018

2019

The original outstanding A note balance of $135M amortized down 26% to $100M, while the original outstanding B note balance of $23.7M amortized down to $17.5M. The principal on the A note continues to pay down at an annualized $7.5M.

2019