Peoples Group's, parent company of Peoples Trust and Peoples Bank, parent Triple Five two months in arrears on $1.4 billion Mall of America mortgage | Peoples Trust | Discussion forum

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Peoples Group's, parent company of Peoples Trust and Peoples Bank, parent Triple Five two months in arrears on $1.4 billion Mall of America mortgage
May 22, 2020
11:04 am
Doug
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Sources: CNBC and Financial Times

As is no surprise, with between 60-80% of shopping mall retailers opting not to pay their monthly rent owed, indoor shopping malls and outdoor strip malls have been particularly hard hit in terms of their cash flows, with the former only able to collect, on average, about 20% of April 2020 rents owed, according to day compiled by Bloomberg, and the latter only able to collect about 40% of April 2020 rents owed, also on average. So, according to the above articles, and first reported in UK's Financial Times, privately owned Triple Five Group of Companies', which also wholly owns the Canadian-based Peoples Group of financial services companies that includes Peoples Trust Company and Peoples Bank of Canada, Mall of America (it also wholly owns American Dream and West Edmonton Mall) is now two months in arrears on its $1.4 billion mortgage.

Edit: It does appear that Mall of America does have options, as it can opt to seek so-called "forbearance" on its mortgage, which is essentially a deferral of its payments owed by tacking them on to the end of the mortgage.

This should not effect Peoples Group in any way, but it is nonetheless interesting, and, I thought, fodder for conversation. sf-cool

Wells Fargo is servicing the mortgage, which is securitized in the commercial mortgage backed securities market. By this time next month, if forbearance has not been sought and approved, then Wells Fargo will report the mortgage as being in "default" to the holders of the commercial mortgage backed securities, which primarily include governments, pension funds, private equity funds, hedge funds, and other institutional class investors. I found it interesting that the U.S. commercial mortgage backed security market was approximately $500 billion, so basically, the Mall of America mortgage represents 0.2% of all securitized U.S. commercial mortgages. That's pretty substantial and incredible.

Cheers,
Doug

May 22, 2020
11:46 am
Loonie
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Thanks for the news, Doug - I think!

What about West Edmonton Mall? Is it owned by Peoples or by the family directly? Is it mortgaged? or do we know?

Malls were already at risk before Covid due to online shopping.

May 22, 2020
12:22 pm
Doug
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Loonie said
Thanks for the news, Doug - I think!

What about West Edmonton Mall? Is it owned by Peoples or by the family directly? Is it mortgaged? or do we know?

Malls were already at risk before Covid due to online shopping.  

No problem. 🙂

Yeah, West Edmonton Mall is owned, presumably by way of an LP, by Triple Five Group of Companies. Ultimately, the Ghermezian family owns all of the equity of Triple Five Group of Companies, the Peoples Group, and their other assets, but Peoples and the real estate assets are entirely separate. Peoples may have advanced mortgages to the Ghermezian family members or to their other commercial interests, but I have no knowledge of that as it's all private. I do suspect West Edmonton Mall has a mortgage, but I don't know by whom or to what extent.

Hope that helps,
Doug

May 23, 2020
6:59 am
canadian.100
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Loonie said
What about West Edmonton Mall? Is it owned by Peoples or by the family directly? Is it mortgaged? or do we know?
Malls were already at risk before Covid due to online shopping.  

Peoples Group does not appear to own any "fixed assets" i.e. property/real estate per their financial statements: https://www.peoplestrust.com/en/about-us/financial-results/

Not only malls face challenges, but with employees working from home, no doubt commercial real estate e.g. office buildings will also be "at risk" as viable. Not unlikely for all property values to start decreasing after a long period of appreciation.

May 23, 2020
7:23 am
Doug
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canadian.100 said

Peoples Group does not appear to own any "fixed assets" i.e. property/real estate per their financial statements: https://www.peoplestrust.com/en/about-us/financial-results/

Not only malls face challenges, but with employees working from home, no doubt commercial real estate e.g. office buildings will also be "at risk" as viable. Not unlikely for all property values to start decreasing after a long period of appreciation.  

@canadian.100, I know you meant well, but I've already answered @Loonie's question(s) above (at post # 3). Also, I never claimed Peoples Group has any involvement. Nonetheless, their sole shareholder, in the Triple Five Group of Companies, which is ultimately beneficially owned by the Ghermezian family, is also the sole shareholder in the Mall of America.

Cheers,
Doug

May 23, 2020
8:47 am
canadian.100
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Doug said
@canadian.100, I know you meant well, but I've already answered @Loonie's question(s) above (at post # 3).
Cheers,
Doug  

Well - excuse me!!!

May 23, 2020
8:58 am
Doug
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canadian.100 said

Well - excuse me!!!  

No need to take offence. I said that I knew you meant well, and if this had been a long thread, it's helpful to reiterate something already said. I just wondered if you had even read the posts preceding Loonie's.

Please don't take offence. None was intended. 🙂

Cheers,
Doug

May 23, 2020
9:45 am
canadian.100
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Doug said

No need to take offence. I said that I knew you meant well, and if this had been a long thread, it's helpful to reiterate something already said. I just wondered if you had even read the posts preceding Loonie's.

Please don't take offence. None was intended. 🙂

Cheers,
Doug  

Yes - I had read all the posts preceding Loonie's. I was simply adding a good supporting reference for readers here - i.e. link to the Financial Statements for some concrete information to more accurately support your "I have no knowledge" "I do suspect" "I don't know" in your post above. I am sure you meant well.

Please write your comments in the forum.