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U.S. mall values plunged an average 60% after appraisals in 2020, a sign of more pain to come for retail properties even as the economy emerges from pandemic-enforced lockdowns, Bloomberg News reported. About $4 billion in value was erased from 118 retail-anchored properties with commercial mortgage-backed securities debt after reappraisals triggered by payment delinquencies, defaults or foreclosures, according to data compiled by Bloomberg. That average drop — which reflects the change in value since the debt was originated years ago — may underestimate losses when the properties come up for sale because so much retail real estate is in distress. And few buyers are willing to take risks on aging shopping centers as e-commerce continues to grab market share. The biggest owners, such as Simon Property Group Inc., Brookfield Asset Management Inc. and Starwood Capital Group, have started to triage properties, walking away from money-losers while reinvesting in viable locations. Hard-hit centers were already decimated by department store bankruptcies and high vacancy rates, before COVID-19 accelerated Americans’ taste for online shopping. Only about half of the 1,100 U.S. indoor malls have a good chance of survival, according to Floris van Dijkum, a real estate analyst with Compass Point Research & Trading. The strong will get stronger while the weakest face abandonment, he said. “There’s a huge bifurcation between good and bad quality,” van Dijkum said. “By value, 80% is in the top 300 malls.”

Cracks are starting to form in the All Year Management real estate empire after part of its apartment development in a hipster Brooklyn neighborhood filed for bankruptcy, Bloomberg News reported. Evergreen Gardens Mezz LLC, controlled by All Year, sought chapter 11 protection on Monday in the Southern District of New York, according to a petition, listing assets and liabilities of $50 million to $100 million. The debtor is part of the 900-unit Denizen apartment complex, a millennial haven in Bushwick, Brooklyn, developed on the former site of the Rheingold Brewery. Evergreen Gardens was part of the New York City affordable housing lottery, offering 183 units, with a 1-bedroom priced at just over $1,000 per month. Amenities at the award-winning complex include a beer and wine brewery, co-working space, rock climbing and a swimming pool, according to the website. The bankruptcy follows a tough year for All Year Management, which saw the pandemic unravel efforts to manage its web of debt that started running into trouble in 2018, according to the Commercial Observer. All Year, founded by Yoel Goldman and currently run by chief restructuring officer Joel Biran, was started in 2007 and has grown to own more than 150 buildings in gentrifying parts of Brooklyn, according to the Observer and Who Owns What, a website that aggregates New York real estate data.

The Federal Reserve warned of significant risks of business bankruptcies and steep drops in commercial real estate prices in a report published on Friday, Bloomberg News reported. “Business leverage now stands near historical highs,” the central bank said in its semi-annual Monetary Policy Report to Congress. “Insolvency risks at small and medium-sized firms, as well as at some large firms, remain considerable.” In part encouraged by government and Fed programs, businesses have taken on more debt over the past year as they’ve struggled to deal with the economic and financial fall-out from COVID-19, including in some cases forced shutdowns. The Fed report, which provides lawmakers with an update on economic and financial developments and monetary policy, was published on the central bank’s website ahead of Chair Jerome Powell’s testimony before the Senate Banking Committee on Tuesday and the House Financial Services panel a day later. In the report, the Fed voiced hopes of an end to the pandemic later this year though it cautioned that pitfalls remained. In particular, it said that commercial real estate prices “appear susceptible to sharp declines” from historically high levels. That could particularly prove to be the case if the level of distressed sales picks up or if the pandemic leads to longer-term declines in demand, it said. Commercial real estate might be hit by a double-whammy after the pandemic, some economists say. An increase in people working from home could result in less demand for office space, while stepped-up online purchases could force more shutdowns of brick-and-mortar retailers and additional vacancies at shopping centers.

Real-estate brokerage Redfin Corp. has agreed to buy apartment search site operator RentPath Holdings Inc. out of bankruptcy for $608 million, in a deal that would combine operators of leading U.S. property listing websites for purchasing and renting a home, the WSJ Pro Bankruptcy reported. The all-cash deal announced on Friday comes months after an earlier acquisition agreement between RentPath and real-estate data provider CoStar Group Inc. was blocked by federal antitrust regulators. Redfin’s proposed acquisition of RentPath is subject to antitrust approval by the Federal Trade Commission and a bankruptcy judge. The acquisition of Atlanta-based RentPath would give Seattle-based Redfin listings for more than 20,000 apartment buildings, the companies said. RentPath, which filed chapter 11 last February, owns property sites ApartmentGuide.com, Rent.com and Rentals.com, which attract on average about 16 million monthly visitors, the company said. Redfin Chief Executive Glenn Kelman said the proposed tie-up would increase traffic for RentPath’s sites because about 20% of Redfin’s monthly visitors are also looking for homes to rent. The proposed sale also provides a way for RentPath to exit chapter 11 following the collapse of its proposed tie-up with CoStar. RentPath pulled out of the deal after spending months working with CoStar to try to get the FTC to approve the acquisition.

The U.S. Securities and Exchange Commission (SEC) on Tuesday sued Morningstar Credit Ratings LLC for allegedly violating U.S. securities laws in its ratings of commercial mortgage-backed securities, Reuters reported. Morningstar’s credit ratings business allegedly violated disclosure and internal controls requirements in 30 commercial mortgage-backed securities transactions from 2015 to 2016 when the agency allowed analysts to make undisclosed adjustments to key stresses in its modeling, the SEC said. A spokesperson for Morningstar said the firm had complied with all regulatory requirements and the complaint related to methodology it had voluntarily retired in 2018. The SEC had also not alleged any investor harm, she said. Ratings agencies came under criticism after the U.S. financial crisis as inflated ratings of mortgage-backed securities helped fuel a U.S. housing bubble. In the wake of the crisis Congress charged the SEC with overseeing the ratings agencies, but the agency struggled with the oversight due to insufficient resources and technology changes, Reuters previously reported. Morningstar previously paid $3.5 million to settle SEC charges it violating conflict of interest rules designed to separate credit ratings and analysis from sales and marketing.

President Joe Biden is extending a ban on home foreclosures for federally backed mortgages by three months and expanding a mortgage relief program in a push to stabilize the nation's housing affordability crisis amid the COVID-19 pandemic, USA Today reported. The foreclosure moratorium was set to expire March 31 and instead will be in place through June 30. It's the second time Biden has extended the ban after he used one of his record number of Day One executive actions to push back a previous Jan. 31 end date. The Biden administration today also will extend the enrollment window to request a mortgage payment forbearance – which allows borrowers to pause or reduce mortgage payments – until June 30. That program also was scheduled to end in March. As a result of a third action, the federal government will now allow borrowers to defer mortgage payments for an additional six months. Eligible homeowners must be enrolled in a forbearance plan by the end of June.