Foreclosed Mall Sold for $100

Galleria at Pittsburgh Mills' previous owners owed $143M
By Newser Editors and Wire Services
Posted Jan 19, 2017 12:44 AM CST
Foreclosed Mall Sold for $100
The flare from a shale well is seen over the Pittsburgh Mills mall in Tarentum, Pa.   (Keith Srakocic)

A Pennsylvania mall that was foreclosed on after its owners failed to repay $143 million has been auctioned off for just $100. Wells Fargo Bank was owed the money from a 2006 loan and submitted the winning—and only bid—for the 1.1 million-square-foot Galleria at Pittsburgh Mills on Wednesday, the AP reports. The bank was acting as trustee for MSCI 2007 HQ11, the trust that bought the mall in suburban Frazer Township. Wells Fargo foreclosed last year on the mall, which opened in 2005. The mall once was worth $190 million but recently was appraised at just $11 million and is slightly more than half occupied.

Analysts say that in this kind of "consensual foreclosure" situation, it's normal for there to be no other bidders. Steve Jellinek at Morningstar Credit Ratings tells the Pittsburgh Post-Gazette that regional malls are struggling and lenders may find it difficult to minimize their losses. "The problem of regional malls is the loss severity tends to be higher than ones located in or near big cities," Jellinek says, adding that it can be hard for malls to recover after they lose big tenants like Sears, which left Pittsburgh Mills in 2014. "Then you see a marked decrease in cash flow and it's harder to repurpose and refill." (There are 484 rooms under an abandoned mall in Michigan.)

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