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Concord’s Steeplegate Mall owner could ‘hand the keys back,’ experts say

The owner of Steeplegate Mall could soon shed the Loudon Road property, experts said yesterday.

Rouse Properties released its financial information for the first quarter of 2014 on Monday, and their filing names the 480,000-square-foot Concord mall as a “special consideration property.”

That means the property “has a heightened probability of being conveyed to its lender absent substantive renegotiation,” the report states.

More simply, Rouse might get rid of Steeplegate Mall if it cannot renegotiate the terms of its mortgage.

The company could return the property to the loan provider instead of making a $47 million payment on that mortgage that is due in August. Shoppers and retailers could feel that dramatically if the lender closed the mall – or not at all, if a new owner took over its operations.

Hayley Cook, a spokeswoman for Rouse Properties, declined to comment beyond the financial filings, which note the mall has been moved to “special servicing.”

To analyst Paul Morgan, that means Rouse is looking for a way out on Steeplegate. Morgan is a managing director and senior equity analyst in New York City for the investment banking firm MLV Cos., and he was on a public earnings call with Rouse Properties on Monday.

“One option in these situations is to essentially hand the keys back to the lender,” Morgan said.

John Vogel Jr., an adjunct professor at Dartmouth College’s Tuck School of Business, said Rouse could also renegotiate its mortgage and keep the mall.

“Especially when a property goes downhill or loses value, it’s not unusual for a developer to then go back to his or her lender and say, ‘You know, I can give you back the keys if you want them because the property is no longer worth enough for me to want to keep managing it,’ ” Vogel said. “Or if (the lender is) willing to give me a break or a lower rate, then they’ll continue to manage it.”

If cash flow has slowed, Morgan said an owner will often negotiate with a lender to surrender a property rather than pay its mortgage.

“It’s relatively common,” he said.

If Rouse does hand over the mall, Morgan said the tenants and shoppers at Steeplegate might not notice at all. The lender could close the mall, but it could also sell to another company that would continue to operate it.

“It’s not something that generally would impact the shopper experience at the property,” Morgan said.

Steeplegate Mall was the second-largest taxpayer in Concord in 2012, behind only Wheelabrator Concord. City records show Steeplegate Mall has dropped nearly $30 million from its assessed property value, which is calculated in part using data on retail sales.

For 2013, the mall’s value is set at $52 million – a compromise that came out of a settlement agreement between Concord and Rouse, which has challenged the city’s assessment in the past several years. In 2012, the city assessed the property to be worth $65 million, but records from the board of assessors show Rouse claimed the mall to be worth only $37 million that year.

One of Rouse’s filings for the first quarter notes the company moved Steeplegate Mall to special servicing in April, but had not yet begun discussions about that loan.

“It’s that negotiation that will determine the ownership of the property,” Morgan said.

(Megan Doyle can be reached at 369-3321 or mdoyle@cmonitor.com or on Twitter @megan_e_doyle.)

Legacy Comments24

It's a fact of life that more people are buying on line so the store front is becoming a dead item. Unless it is a niche store then it just does not make it because people will just use an APP and find it cheaper on line. As the time goes by more and more NH store fronts will become empty because you can buy on line and get it shipped without having to fight traffic. It has zero to do with who is in political office but rather the wants , needs and shopping habits of Americans.

What needs to happen is a reinvention of the mall and a reinvention of strip malls as well. Smaller outlets that offer exclusive items that are not offered online until their retail life has been exhausted. If companies branded and registered and patented their own designed merchandise and did not offer it on Amazon and places like that, retail could recover. Brick and mortar will come back but in a different form. As for now, I did all of my Christmast shopping for the last three seasons online!!

the Christmas season internet sales prove your postulation as incorrect

HEADLINE : Tsunami of Store Closings to Sweep U.S. Retailers.... "JCPenney, Macy's, and Sears have all recently announced fresh rounds of closures and layoffs. HEADLINE: This Simple Chart Shows All You Need To Know About What’s Happening To America’s Businesses ......For the first time since the Carter presidency, more businesses are failing in America than are being created, CAUSATION: NObama and democrats failed economic policies - SOLUTION :sack every democrat next election

BPR...I'm guessing Tillie and the gang have not seen your post yet.

I don't know about the "gang" but I usually just skip over BBR's posts. never a new or positive thought there. Kind of indicative of the Republican party in general.

So they are much like your posts which are kind of indicative of the Democrat party in general.

Come on Itsa, you can do better than just repeating me. Kinda like a little kid in a school yard.

BPR Tillie. Besides if you did respond to his posts with your usual name calling, he would call you out. And we all know what happens when folks call you out Tillie.

Don't worry about it, Rabbit, when it comes to name calling you are still Number One.

Of all the variations I've seen on BPR's name in here, I like "PBR" the best. Think it was posted by GCarson or gracchus, can't recall, but it took the (blue) ribbon.

I like to assume that his logic is indeed beer fooled or fueled. Sorry to slight the brand.

Of course, 8 years of Nixon_ford, 8 years of Reagan, 4 years of Bush I and 8 years of Bush II have had NOTHING to do with anything. Then we have Bill Clinton's terms in which economic policy was written by Republicans (can you say Gramm - Leach - Bliley?). And lest you forget: 35 years of Paul Volcker, Alan Greenspan and Ben Bernanke running the Fed. "[F]ailed economic policies" alright, except BPR as usual is looking 180 degrees in the wrong direction.

only Obamanistas do not accept that this is the NObama economy. What was it VP Biden said ?..Oh yea.... "Even though some of the American people think the economy tanked because of the last administration, that's not relevant." "What’s relevant is, we’re in charge....

Just exactly what do Obamanistas have to do with online shopping, price comparison and store closings. It's never been a secret that at mall's you paid a premium for convenience. Well what Mall''s did to Main Street's the internet is now doing to Mall's. The cycle of life, not politics. I keep trying to tell you that politics is not a causation for all that ails us.

Obama has had 6 years to try to improve things yet he continues to keep doing things which drive it further into recession. He has failed and the result is a failure of retailers who are closing because the business is just not there with these employment levels.

There is only so much a good president can do by himself. --------------Exhibit 1 - "The single most important thing we want to achieve is for President Obama to be a one-term president." - Senate Minority Leader Mitch McConnell, quoted in National Journal, November 4, 2010. You yourself stated that you have done your last three years of Xmas shopping online. I know I have as well. Not exactly any political motives other than it's cheaper. Perhaps this could be the reason.

Vice President Biden's statement was more bravado than fact. John Boehner's House of Representatives and the filibuster-happy Republicans in the Senate have made certain that the Obama administration is anything but "in charge." It doesn't fit the pretty BestPres narrative, but this economy is, more than anybody else's John Boehner's and Ben Bernanke's.

i suspect you need to find some debate training - revisionist history is a debate tool of grade schoolers

I keep expecting to see you post "I know you are, but what am I" You don't debate you state, you also don't voice opinions you are always calling them FACTS. All in all, just the same old broken record.

GCarson, have you taken a look at your own posts?

Yes I know my posts. I just have a deep seared issue with those that post pointless, obviously made up illogical drivel. Those that have a pinpoint vision and an ability to not look at the whole of an issue. Please give me just one example of anything not factual that I have posted. Please note I said not factual, not something that is pure conjecture or innuendo or anything from a website that has the word patriot, heritage or glenn beck. I have asked for specifics before but you always answer a question with yet another inane question or nothing at all..

BPR looking 180 degrees in the wrong direction, reminds me of the following. Had Bush Jr. been President of the US in 1941, we would have invaded Canada instead of Japan and Germany!

WOW - good one - a zinger

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