Mark Russo, left, and John Dorsey were named permanent receivers for the Providence Place mall in a Superior Court hearing in Providence on Wednesday, Dec. 4, 2024. (Nancy Lavin/Rhode Island Current).
“Too early to tell” was the common refrain characterizing a court hearing in Providence Wednesday over the fate of the Providence Place mall.
Can the shopping destination survive financial woes and the changing retail landscape? Too early to tell. Would the court-appointed receivers market the property to sell as something other than a mall? Too early to tell. When will the unknown number of creditors who allege the former property owner owes them $259 million in outstanding principal and interest from a 2011 loan be repaid, if ever? Too early to tell.
Despite these many lingering questions, Rhode Island Superior Court Judge Brian Stern quickly agreed to make West Warwick attorneys John Dorsey and Mark Russo the permanent receivers overseeing the mall during its time of transition. The two had been serving as temporary receivers since Oct. 31, when Stern approved the creditors’ petition for receivership.
Permanent status now allows the attorneys to set up the process by which creditors will, potentially, be repaid, while readying the mall for an eventual sale. Already, Dorsey and Russo moved to replace Brookfield Properties with a new property manager, Texas-based Centennial Real Estate Management LLC. And, they have begun addressing security and aesthetic problems plaguing the mall and connected parking garage, returning security and housekeeping staffing hours to pre-pandemic levels, with plans to replace outdated and often broken parking garage technology in the new year.
“We’re confident,” Russo said, speaking to reporters after the 30-minute hearing in Providence County Superior Court. “It’s been there for 25 years. We’re going to make sure it’s going to be there another 25 years.”
But it may not be the same as it’s been. Dorsey acknowledged the retail shifts that have contributed to the mall’s financial struggles — losing tenants and shoppers.
When the mortgage loan was secured in 2011, the mall and attached parking garage were valued at $558 million, according to a June report by Kroll Bond Rating Agency (KBRA). As of May 2021, the appraised value had plummeted to $240 million, and as of June, KBRA downgraded all of the six classes it rates for the mall’s commercial mortgage-backed security, warning of heightened credit risk amid the already past-due loan.
Broken parking equipment and wear-and-tear aside, Russo insisted the mall was still a “performing asset,” naming its 90% occupancy rate and 88 leases as examples of its appeal.
Macy’s is staying in Providence Place, court receivers confirm
“If I’m an investor walking into it, my impression is ‘I can do something with this,’” Russo said. “It’s unique. It’s a good public investment. It’s worth repositioning and saving. That’s what we’re trying to do.”
Lease details, including how many are set to end in 2025, are still being reviewed. Despite the shadow cast by the receivership, the state-level equivalent of bankruptcy, Russo and Dorsey said they’d received positive interactions from tenants, including flagship anchor store Macy’s.
But how long Macy’s, which dates back to the mall’s founding in 1999, will remain is still up in the air. Macy’s executives announced plans in February to shutter 150 “underperforming” stores nationwide in the next three years; the list has not been finalized, a company spokesperson said in an email Tuesday.
Russo acknowledged that there’s no guarantee that Macy’s won’t uproot from Providence, but said he had “positive” initial interactions with company representatives.
“We’re going to work really hard to convince them to stay,” he said.
Meanwhile, Centennial has taken on day-to-day management of the 1.3 million- square-foot property, bringing in more security guards and maintenance staff. Dorsey said fewer, regular security patrols have left shoppers feeling uneasy.
Security and housekeeping staff hours were cut 40% each in 2020, and never restored, Russo said.
Together, the receivers and management team are finalizing budget and operational plans, with a final budget expected to be submitted to the court in January. As for when the property will be ready to hit the market?
Once again, “It’s too early to know,” Dorsey said. “We’ll have a better handle on things early next year.”
Dorsey and Russo have also not spoken to Gov. Dan McKee or Providence Mayor Brett Smiley about the mall, though Dorsey said they have plans to meet.
An existing tax treaty with the city of Providence is set to end in 2028. The 30-year agreement, inked at the time the mall opened in 1999, requires the property owners to pay $500,000 a year in property taxes. If taxed at fiscal 2025 city commercial rates, the property would be paying nearly $24.9 million in taxes based on its 2024 city tax-assessed value of $708.7 million.
Attorneys representing the creditors who filed the receivership petition attended the hearing but did not speak except to indicate they agreed with the receivership plan outlined by Dorsey and Russo.
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