PORTLAND, Ore. — The Lloyd Center mall in Northeast Portland is facing foreclosure and may soon be redeveloped.
KKR Real Estate Finance Trust, a New York-based real estate lending company, plans to take ownership of the mall. The news was first reported in Blooomberg Law on Oct. 26. The company plans to redevelop the property to add residential and office space.
"We intend to foreclose and to take ownership of the asset, enabling us to optimize value over the near and medium term," said Patrick Mattson, president and chief operating officer of KKR Real Estate Finance Trust Inc., during a conference call with investors.
The Lloyd Center mall opened in 1960 and at the time, it was said to be the largest mall in the world. It was originally designed as an open-air mall, considered futuristic at the time. In 1991, a roof to keep out the wind and rain was added as well as a food court.
Gerry Mildner, the academic director at the Portland State University Center for Real Estate, said the Lloyd Center is an outdated mall concept.
"The enclosed mall is a 1950s-1960s thing," Mildner said. "It's a retail type that's fallen out of favor."
Mildner said modern shoppers like open-air malls like Bridgeport Village. He said the Lloyd Center has also suffered from the perception of problems with homeless people nearby and crime in and around the mall.
"When people think about Washington Square [mall], they think different than when they think about the Lloyd [Center] mall, just because of demographics and the state of civil order around those properties," Mildner said.
Troy Douglas owns Cultural Blends, which has sold sneakers and vintage sports clothing in the Lloyd Center for the past three years. He said he's been assured that retail will be part of the mix at the Lloyd Center for the next few years.
"I just don't want to overreact. We've been discussing this with management for quite some time," Douglas said. "I know how people read it. They think, 'Oh, the mall's closed.' The mall's not necessarily going to close now. It may in six months, a year, five years. I'm not sure."
A spokesperson for Lloyd Center said it would not be commenting on the possible foreclosure, including what will happen with the ice skating rink or the stores currently still open inside the mall. The change of ownership is not expected to impact the mall's operations during the holiday season.
According to The Oregonian, KKR loaned $177 million towards a large renovation of the mall in 2015. The mall owed $110 million in debt which has been overdue since October of 2020.
A spokesperson for KKR sent KGW the following statement:
"KKR Real Estate Finance Trust provided a loan to finance the renovation of Lloyd Center in 2015 and we have been working with the property owners since October 2020 after they were unable to make scheduled payments on the loan. We plan to take ownership of the property before the end of this year which will enable us to begin working with local partners to prepare for a long-term redevelopment of the site."
The Lloyd Center mall has seen its fair share of issues since the remodel. Early in the pandemic, the mall closed for some time as stores deemed not essential were to remain closed. Multiple major retailers inside the mall closed their doors including Marshalls, Nordstrom, Sears and most recently Macy's.
On Aug. 6, an electrical fire closed the mall down for weeks. Portland Fire & Rescue (PF&R) responded to reports of smoke coming from the lower parking garage of the mall. Officials said the fire started in a generator room and was extinguished by sprinklers. The mall was evacuated due to smoke and power was shut off, but there were no injuries reported. The mall reopened again in late August.