Pyramid Management Group, a shopping center developer, is buying back the mortgage on a struggling megamall it owns in Syracuse, New York, for cents on the dollar. The move will mostly wipe out bonds that originally carried top AAA ratings, leading to losses exceeding $350 million for bondholders.

The buyback reflects the ongoing decline of traditional retail properties, as the megamall has struggled with falling foot traffic and tenant vacancies. Pyramid Management Group is repurchasing the debt at a steep discount, effectively writing off a significant portion of the original loan value.

Bond investors who once held these highly rated securities are now facing substantial principal losses. The transaction highlights the risks inherent in commercial mortgage-backed securities tied to large shopping centers, even those with strong initial credit ratings.

The Syracuse property, once a thriving retail hub, now serves as a cautionary tale for the retail real estate sector. As Pyramid Management Group completes the buyback, the broader market watches for similar distressed deals in other struggling malls across the country.