Finance  ·  CMBS

CMBS Loan on Miami International Mall Hits Special Servicing

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Simon Property Group is facing a risk of default over a $159 million loan on the Miami International Mall in Doral, Fla.

The commercial mortgage-backed debt has been transferred to special servicing following its Feb. 6 maturity date, with the borrowers now seeking a modification and extension agreement, according to a Tuesday report from Trepp.

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Simon is working with special servicer LNR Partners toward a forbearance agreement, but the loan is facing “imminent maturity default” with no ability to either refinance or pay off the debt, the special servicer indicated in February remittance data provided by CRED iQ.

The $158.75 million interest-only loan, collateralized in two separate deals ($98.75 million in JPMBB 2014-C18 and $60 million in JPMBB 2014-C21), is secured by the 1982-built regional mall.

The loan covers 306,855 square feet of inline retail space in the 1.1 million-square-foot property, located at 1455 NW 107th Avenue in Doral, about 12 miles northwest of Downtown Miami. 

Tenant occupancy at the mall is now around 80 percent compared to 94 percent when the loan was originated by Barclays 10 years ago, with cash flow around 14 percent below the underwritten levels, noted David Putro, head of commercial real estate analytics at Morningstar Credit Analytics

Non-collateral anchor tenants of the mall include Macy’s and JCPenney, which both have February 2028 lease expirations. A third non-collateral tenant, Kohl’s, closed in January to make way for a new 110,000-square-foot Elev8 Fun entertainment concept — which is a point in the mall’s favor, according to Putro. The entertainment venue, which will feature arcade games, bowling, a go-cart track, interactive miniature golf and laser tag, should cause a boost in mall traffic once Elev8 Fun is scheduled to open in 2025. 

“Even though it is non-collateral, there is obviously a positive residual effect on the rest of the space,” said Putro. “All things considered, it’s not the worst story for a mall that has to refi right now.”

Simon is likely to try to gain an extension of its existing loan, which has an interest rate of 4.4 percent, in order to provide time for Elev8 Fu to open, Putro added. The loan benefits from having strong underwriting standards with a 40.9 percent loan-to-value ratio since it was issued soon after the Global Financial Crisis of 2008. The loan’s debt service coverage ratio as of September 2023 was 2.2 compared to 2.7 at origination, according to Putro. 

Representatives for Simon Property Group did not immediately return a request for comment.

Andrew Coen can be reached at acoen@commercialobserver.com