The four malls are the 335,000-square-foot Bradley Square inCleveland, TN; the 556,000-square-foot Martinsburg Mall inMartinsburg, WV; Shenango Valley Mall, a 509,000-square-footproperty in Hermitage, PA; and the 478,000-square-foot Mount BerrySquare in Rome, GA. They comprise four of the five mall propertiesLightstone acquired for $120 million fromPennsylvania Real Estate Investment Trust in 2004. The fifth mallproperty in the PREIT deal--the West Manchester Mall in York,PA--was not included in the mortgage.

According to a release from Fitch Ratings, the $73.6-millionloan on the malls was transferred to special servicing last October"due to imminent default." The loans were given through JPMorganChase Commercial Mortgage Securities Trust in 2006. By the end ofQ1 2008, the debt service coverage ration on the four malls haddeclined to 0.95, according to Fitch.

The Fitch release from December says that Lightstone "approachedthe lender indicating that they would like to surrender theproperties and is cooperating in the appointment of a receiver."The Wall Street Journal reported that the portfolio of mallswas also carrying $18.2 million in mezzanine and secondary debt. ALightstone spokesman did not respond to requests for comment bydeadline.

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.