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Retail may be “back in favor," but that does not mean every retail asset is out of trouble. There is a major difference between necessity-based retail in strong markets and traditional malls, outlet centers, and retail assets with large anchor exposure.
Even performing, first-class malls can trade at double-digit cap rates and often regional malls in secondary markets have trouble transacting in the current capital market environment. That creates real pressure for many assets financed or purchased over the last decade.
For borrowers, lenders, and asset managers, mall and retail-backed loans may need a fresh look especially when prior modifications, A/B note structures, or discounted resolutions are no longer enough to solve the capital stack.
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