Finance  ·  Distress

$300M CMBS Loan Secured by Santa Monica Place Mall Faces ‘Imminent Default’

The outdoor shopping mall renovated in 2010 has been hampered by vacancies and debt service challenges since COVID

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A loan secured by an iconic outdoor shopping mall in Santa Monica has entered special servicing again, and faces a maturity default for the second time in two years. 

The $300 million loan secured by Santa Monica Place — an outdoor shopping mall built in 1980 and renovated in 2010 — has been sent to special servicing and is at risk of “imminent default,” according to Trepp. While the single-asset-single-borrower CMBS loan was initially due to mature in 2019, it received a 36 month extension that established a new maturity date of Dec. 2022. 

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Since then there’s been further extensions. After entering special servicing in Aug. 2022, the loan received a maturity extension to Dec. 2023 that included a pair of one-year extensions that pushed the last possible maturity date to the end of 2025. 

Macerich, a retail landlord and real-estate investment trust based in California, owns Santa Monica Place. The sponsor had exercised its first one-year extension on the loan last year. 

Santa Monica Place is more than 527,000 square-feet and sits in a neighborhood that includes 1.2 million people living nearby and more than 133,000 office workers within a three mile radius.

But the COVID-19 pandemic has gradually weakened the foot traffic and spending at the open-air mall. The debt-service-coverage-ratio on the property’s loan has fallen from 2.5x in early 2020 to 0.69x in 2023 — occupancy dropped from 80 percent to 73 percent last year. 

The property was originally appraised at a value of $622 million for securitization in 2017; the most recent Broker Opinion of Value [BOV] of the property came out to $264.5 million, according to Trepp.    

Current tenants include 7 For All Mankind, Bath & Body Works, The Cheesecake Factory, Forever 21, and Hugo Boss. Tenants planned to lease in 2024 include ARTE Museum and Din Tai Fung. Recent vacancies include Bloomingdales and Arclight

Macerich did not respond to a request for comment. 

Brian Pascus can be reached at bpascus@commercialobserver.com