SYRACUSE The $300 million senior commercial mortgage backed securities loan financing Destiny USA, originally issued in 2007 against the parent Carousel Center property and modified four times since the 2014 default, was extended a fifth time on March 18, 2026 by special servicer KeyBank Real Estate Capital, pushing the maturity to June 6, 2027 and adding a $4.1 million reserve for capital improvements tied to occupancy benchmarks the property has missed for 11 consecutive quarters.
That extension, disclosed in the April 9, 2026 monthly remittance report filed with Trepp by master servicer Wells Fargo, kept Pyramid Management Group in operational control of the Syracuse property and avoided a special servicer auction that bondholders had pressed for in late 2025. The remittance report shows the property’s net operating income at $14.3 million for the trailing 12 months ending February 2026, against debt service of $18.7 million. The shortfall, the seventh consecutive year of negative coverage, has been funded out of a $32 million escrow Pyramid posted under the 2022 modification.
This story came from public records we pulled ourselves
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The vacancy picture, May 2026
CNY Signal walked all three retail floors and the upper Canyon level on May 7, 2026 and counted 187 occupied storefronts, 56 vacant storefronts, and 14 spaces operating as pop ups, kiosks, or temporary events. Excluding pop ups, the storefront vacancy rate stood at 23 percent of leasable in line units, up from 19 percent in the same survey 12 months earlier and well above the 12 percent national average for super regional malls reported by Cushman and Wakefield’s first quarter 2026 retail market beat.
The largest single vacancy remains the former Bon Ton anchor at the southwest corner of the second floor, which has sat empty since the chain’s February 2018 liquidation. The 138,000 square foot footprint is the largest unleased anchor box in any New York State enclosed mall. Pyramid Vice President of Leasing Joseph Castaldo, in a written response to CNY Signal dated May 9, 2026, said the company is in active negotiations with two prospective tenants for the Bon Ton box, one a national experiential entertainment brand and one a regional sporting goods retailer, but declined to name either.
The second largest vacancy is the former Lord and Taylor box at the eastern corner of the first floor, 117,000 square feet empty since the chain’s August 2020 liquidation in bankruptcy court. The third is the former Pier 1 Imports, 14,200 square feet vacant since the chain’s May 2020 closure of all stores. The former H and M, which closed October 31, 2025, is being held for a Q3 2026 relet to Primark, according to Castaldo, with construction permits filed with the city building bureau on April 2, 2026.
Notable 2026 openings and closings
Three new tenants opened during the calendar year. Five Below moved from its 8,400 square foot first floor location to a 14,200 square foot reformat on the second floor on February 14, 2026. Rue 21 returned to the mall on March 21, 2026 after a three year absence with a 4,800 square foot space adjacent to American Eagle. Sport Clips opened a kiosk format adjacent to the food court on April 18, 2026.
Two closures hit during the same period. Express closed its 6,200 square foot store on January 25, 2026 as part of the chain’s national bankruptcy liquidation. Things Remembered closed its 1,400 square foot kiosk on March 7, 2026 after the parent company’s 2024 second filing. The departures continue a trend that has removed 18 national chain stores from the property since 2022, partially offset by 22 new entries during the same period that are predominantly regional, local, or experiential rather than traditional apparel.
How Carousel debt put Destiny in this spot
The Carousel Center opened October 15, 1990 on the south shore of Onondaga Lake on land the City of Syracuse had remediated from an industrial junkyard owned by the Solvay Process Company. Pyramid founder Robert J. Congel financed the original 1.5 million square foot mall through a complex stack that included a $230 million bond issue from the Syracuse Industrial Development Agency, $50 million of personal equity, and an unusual 30 year payment in lieu of taxes agreement granting the property full real estate tax abatement on the original footprint until 2035, then phasing in payments through 2055.
The PILOT agreement, which has saved the property an estimated $315 million in real estate taxes through 2024 according to a 2025 Syracuse Common Council Office of Inspector General analysis, became a flashpoint in 2007 when Congel proposed a $539 million expansion to add a hotel, aquarium, indoor go kart track, and a 1.3 million square foot retail wing. The city extended the PILOT and the Industrial Development Agency issued an additional $228 million in tax exempt bonds in 2007. Congel personally guaranteed a $300 million senior CMBS loan from Bear Stearns secured by the original Carousel building to fund the rest of the expansion budget.
The 2008 financial crisis hit before construction was complete. Bear Stearns collapsed in March 2008. The expansion opened in three phases between June 2011 and October 2012 at a final cost of $645 million, $106 million over budget. The original projection of a 200 room Hyatt Hotel and a destination aquarium never materialized. Congel sued Citigroup, which had inherited the construction loan from Bear Stearns, in a $30 billion damages case filed in Onondaga Supreme Court in 2008. The case settled confidentially in 2014.
The 2014 default and four modifications
The senior $300 million CMBS loan, originally a 10 year balloon due June 2017, was transferred to special servicer C III Asset Management in June 2014 after Pyramid failed to meet debt service coverage ratio covenants tied to net operating income. The first modification, signed October 30, 2015, extended the maturity to June 2019 and reduced the interest rate from 6.59 percent to 4.85 percent in exchange for a $40 million principal paydown that Pyramid funded from a Goldman Sachs second mortgage.
A second modification in March 2019 pushed maturity to June 2022 and added a cash management trigger that pulls all property revenue into a lockbox the special servicer controls. A third modification in May 2022, signed two months after the property briefly went into receivership over the pandemic shortfall, extended maturity to June 2025 and forced Pyramid to post the $32 million capital reserve. The fourth, in October 2024, was a six month bridge that bought time for the fifth.
The current March 2026 fifth modification, according to the Trepp filing, requires Pyramid to maintain in line occupancy at or above 80 percent by June 30, 2026, fund $14 million in capital improvements over the 15 month extension period, and either refinance or sell the property by the June 6, 2027 maturity. If those benchmarks are missed, the special servicer retains a unilateral right to call an auction.
What Pyramid is doing in 2026
Pyramid CEO Stephen Congel, son of the founder, told a Syracuse Press Club audience on April 22, 2026 that the company is targeting three structural changes to the property by year end. First, the conversion of the former Bon Ton anchor into either a 138,000 square foot Round 1 Bowling and Amusement venue or a Dick’s House of Sport, both of which Castaldo confirmed are the active leasing prospects. Second, the conversion of the upper Canyon level, currently 38 percent vacant, into a medical and professional services floor anchored by a Crouse Health urgent care under a 12,400 square foot lease that was filed with the county clerk on March 28, 2026. Third, an exterior facade refresh on the southwest corner facing Hiawatha Boulevard with new signage and lighting, with permits issued April 11, 2026.
The property recorded 22.1 million visits in calendar 2025 according to Placer AI foot traffic data cited in the April 30 industry presentation, down from a 2019 peak of 24.4 million but up from the 17.9 million 2020 pandemic trough. Destiny USA remains the largest tourist attraction in Onondaga County by visit count, ahead of the Syracuse University football schedule at the Dome by a factor of roughly three.
The hotel that never opened
One of the more durable open questions at the property is the 30,000 square foot shell space on the Canyon level originally framed for the 200 room boutique hotel Congel proposed in 2007. The shell, fully framed and weather sealed, has sat empty since 2012. Pyramid filed a Syracuse city building permit on February 19, 2026 to convert the shell into a 28 unit micro residential pilot, an extended stay format with 380 square foot studio units priced between $2,200 and $2,800 per month. The Syracuse Planning Commission held a public hearing on the proposed use change on April 8, 2026 and tabled the matter for further review of parking and emergency egress.
The micro residential pilot, if approved, would be the first residential conversion at any Pyramid property and could be a template for other underperforming Pyramid centers in Albany, Poughkeepsie, and Buffalo. A Pyramid spokesperson declined to comment on the timeline for a vote, but the Common Council Planning, Land Use and Zoning committee is scheduled to discuss the proposal on May 28, 2026.
What this means for Syracuse
The property still generates approximately $620 million in annual taxable retail sales according to the Onondaga County Office of Real Property Services 2024 assessment workup, supporting roughly 4,200 part time and full time retail jobs at an average wage of $34,800 per year. Sales tax revenue from the property, which under the PILOT agreement is the city’s main revenue capture from the site, was $24.8 million in fiscal year 2025, the third largest single property contribution to the Syracuse general fund.
If the special servicer were to eventually foreclose, the most likely scenario in the May 2026 industry outlook from S and P Global Market Intelligence is a deed in lieu transfer to a national institutional owner with a portfolio of restructured malls, followed by a partial demolition and redevelopment over five to seven years. The first floor and the Canyon would likely be retained for retail, the second floor partially demolished or repurposed for warehousing or last mile fulfillment.
CNY Signal will track the June 30 occupancy benchmark and the Common Council May 28 zoning discussion. The next CMBS remittance report is scheduled for release June 11, 2026.
