DC-Area Shopping Center Lands $46M CLO Refi

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A shopping center near Washington, D.C., has turned to the CLO market for a $46 million refinancing, according to a Kroll Bond Rating Agency report which analyzed the deal. 

SEE ALSO: Williamsburg Hotel Nears $76M Refi to Cure Loan Default

The loan, from Bridge REIT, refinances a prior round of funding on The Shops at Congressional Village, a 99,000-square-foot mall at 1701 Rockville Pike in Rockville, Md., about 13 miles north of the Capitol Building. Bridge’s mortgage, which closed earlier this year, is set to be included in the upcoming BDS 2019-FL4 collateralized loan obligation deal, which will consist entirely of Bridge-originated debt.

The three-building campus, owned by D.C. investor Ronald Cohen, had been well-leased in recent years but suffered a blow last summer when its largest tenant at the time, sporting-goods store REI, called it quits on a space that represented more than a fourth of the shopping center’s leasable area. A swimming school and a Chinese restaurant have since partially leased the newly subdivided space, but overall occupancy remains dinged at 72 percent, well below the average rate over the last five years.

Other key occupants include a salon, a post office and a Verizon Wireless store. Built in 1967, the property also includes an apartment building that is not collateral for the loan.

The three-year debt will cost Cohen interest of 400 basis points above Libor, with a full-term interest-only payment structure. It replaces a $46 million first mortgage from Prime Financial, originated in 2017, that was accompanied by $7 million in mezzanine debt from Rialto Capital.

A $76.7 million appraisal from earlier this year gives the mortgage a 60 percent loan-to-value ratio. Last year, the Shops earned $5.2 million in revenue against expenses of $1.6 million. 

Cohen’s company, Cohen Siegel Investors, controls a diverse portfolio almost entirely in the suburbs around Washington D.C. It owns single-family houses and apartment buildings in Maryland and Virginia, and in Maryland it also owns an office building and a warehouse. Tacked on are a hotel and a residential property in Snowmass, Colo., a major ski-resort gateway.

Representatives for Cohen and Bridge did not immediately respond to inquiries.