In the latest sign of the times for struggling regional malls, the Fairlane Town Center owner has defaulted on its $135.7 million loan for the Dearborn mall and two others in Virginia and Texas.

New York City-based Trepp LLC, which tracks commercial mortgage-backed securities debt, says Miami Beach, Fla.-based Starwood Capital Partners Inc. received a two-year extension in November 2017 through last November to pay the balance of the to settle borrow, but did not make it. According to Trepp, a debt service is processing a second 60-day grace period as it considers modifying and extending the loan.

Starwood Retail Partners, a division of Starwood Capital Partners, said in a statement emailed to Crain’s Thursday afternoon that it is “actively working to expand and restructure our financing at Fairlane Town Center.”

“In the meantime, everything is running as usual at the property,” the statement said.

The debt could be transferred to a special service provider, says Trepp.

“In general, whether it is a loan modification, extension or infusion of additional capital, the Special Servicer will seek to develop a settlement or resolution strategy to maximize the amount recovered for the lender and CMBS bondholders.” to sublet the property, etc.,” said Catherine Liu, a research associate at Trepp.

Regional malls have been hit as online retail has claimed thousands of brick-and-mortar stores nationwide, ranging from small corner shops to large department stores.

Dennis Bernard, founder and president of Southfield-based Bernard Financial Group, said it’s too early to say if the Fairlane Town Center at Michigan Avenue and Evergreen Road and the other lots will be auctioned.

“There’s also a portfolio factor to consider,” Bernard said in an email. “Who knows what the value of the other two malls is and if Starwood thinks they’re worth saving or keeping, which influences their decision to go with Fairlane.”

Lakeside Mall in Sterling Heights was sold for $26.5 million late last year after Chicago-based General Growth Properties defaulted on a $144 million loan in 2016 and sold the property to the Specialist service provider C-III Capital Partners LLC departed. The derelict, vacant Summit Place Mall in Waterford Township on the Pontiac border was sold in 2018 as a $3.7 million redevelopment project.

Christopher Brochert, a retail expert, co-founder and partner at West Bloomfield Township-based Lormax Stern Development Co., lamented the decline of the country’s malls.

“It’s very, very sad to see such an icon of American history just evaporate,” he said. “The super-regional malls were an icon of the 1960s, 1970s and 1980s of American social fabric and society. It’s like it’s slowly and surely disappearing. The malls that will survive are the ones like Somerset (Collection in Troy ) or the higher end or things that maybe aren’t as high end.”

Fairlane, The Shops at Willow Bend in Plano, Texas and Stony Point Fashion Park in Richmond, Virginia reported revenue from $55.1 million in 2015 to $48.1 million in the first nine months of 2019, said Trepp. Revenue for calendar year 2018 was nearly $52 million.

According to Trepp data, Fairlane’s revenue was $21.2 million in 2016, $22.1 million in 2017, and $21.6 million in 2018. Net cash flow — income less operating and capital costs — increased from $7.5 million in 2016 to $8.1 million in 2017 and $8.2 million in 2018, Trepp said .

Starwood purchased Fairlane and The Mall at Partridge Creek in Clinton Township, along with five other malls, from Bloomfield Hills-based Taubman Centers Inc. (NYSE: TCO) for $1.4 billion in a deal announced in June 2014 that closed in October was completed in 2014.

Fairlane’s biggest users are Macy’s (240,000 square feet); JC Penney (190,500 square feet); Ford Motor Co. (120,000 square feet); and AMC Theaters (103,000 square feet), according to Trepp.

Built in 1976, the mall is worth about $39.7 million, or about 29.3 percent of the bill’s $135.7 million balance sheet. The three malls total 3.1 million square feet, according to Trepp.

Brochert said he believes Fairlane is in decline.

“That thing has been spinning around on the toilet floor for a long, long time,” he said. “They spent a lot of money trying to keep this thing afloat and it just never succeeded.”