Simon May Relinquish Boston-Area Mall

Simon Property Group may soon relinquish ownership of Square One Mall in Saugus, Massachusetts, due to a struggling $76M CMBS loan. The loan, which is backed by a 540K SF portion of the mall, faces nearly impossible odds to refinance ahead of its January maturity.

The loan is tied to a significant portion of the 930K SF mall, excluding the Sears and Macy's department stores. As of March 31, the portion of the mall tied to the loan was 74% occupied. Simon received a five-year extension on the loan in 2022 after dealing with pandemic-era pain, but the loan's net cash flow has declined every year since.

Simon has listed Square One Mall in the Other Properties category in its earnings materials since 2021, a list that included many malls it gave back to lenders during the pandemic-era retail downturn. This categorization, combined with the loan's struggles, indicates that the property will likely be handed back to the lender and then sold.

The mall sits along Route 1 about 10 miles north of downtown Boston, with tenants including Dick's Sporting Goods, Best Buy, TJ Maxx, and Old Navy. While Simon has recently shown strength in the broader mall sector, including a $175M refinancing deal for Northshore Mall in Peabody in February and the completion of a redevelopment of Burlington Mall in 2024, Square One Mall's struggles may lead to a change in ownership.

## What it means The potential loss of Square One Mall highlights the ongoing challenges faced by some malls in the wake of the pandemic. Despite the broader sector showing signs of strength, individual properties like Square One Mall continue to struggle with declining net cash flow and occupancy rates. As the mall sector continues to evolve, properties like Square One Mall may be at risk of changing hands or undergoing significant redevelopment.