Macerich Refinances Arizona Mall, CBL Works Through $231 Million in Debt, Whittled Down La Quinta Portfolio Refinanced

Article originally posted on CoStar on March 3, 2023

A Weekly Look at the Commercial Mortgage-Backed Securities Business

Scottsdale Fashion Square is one of the most profitable malls in the country. (CoStar)
Scottsdale Fashion Square is one of the most profitable malls in the country. (CoStar)

Macerich Refinances Arizona Mall: Goldman Sachs is heading to market with a portion of a $700 million loan in a single-borrower, single-property commercial mortgage-backed securities deal — the first such mall-backed offering since August, according to CoStar data. The $500 million SCOTT Trust 2023-SFS deal is secured by Macerich’s 2.1 million-square-foot Scottsdale Fashion Square in Scottsdale, Arizona.

Regional malls have been one of the hardest-hit property types during the COVID-19 pandemic, which accelerated a consumer buying shift to online shopping. Scottsdale Fashion Square, however, is one of the best-performing malls in the country.

The property reported strong overall sales of about $849.1 million for tenants excluding department stores at the end of 2022, according to Fitch Ratings, which is rating the CMBS offering. Tenants excluding Apple and Tesla posted sales of $1,511 per square foot. That’s up from pre-COVID results of $875 per square foot in 2019.

Macerich has invested about $377 million to redevelop the property’s interior and exterior and fund tenant improvements. It is also planning an additional investment of between $80 million and $90 million to develop a second luxury wing over the next two years. The project plans to feature an Hermès flagship store totaling roughly 11,000 square feet.

Macerich acquired the mall in 2002 for $861 million. In obtaining the refinancing, Cushman & Wakefield appraised the property at $1.83 billion, according to Fitch analysis.

The five-year, fixed-rate loan proceeds are to be used to refinance $403.9 million of existing debt secured by the property and return $274.5 million in equity to Macerich, according to Fitch. The refinancing is part of a larger $1.4 billion series of refinancings Macerich has undertaken in recent months.

The owners of West County Center in suburban St. Louis are working out a potential loan extension or modification. (Nathan White/CoStar)

CBL Works Through $231 Million in Debt: In its year-end earnings report in February, retail landlord CBL Properties updated the status of more than $231 million in troubled CMBS loans tied to three of its mall properties.

CBL is in discussions for a potential extension or modification of a $161 million loan secured by West County Center in suburban St. Louis. The real estate investment trust owns the 1.2 million-square-foot regional mall in partnership with the Teachers Insurance and Annuity Association of America and Netherlands-based APG. CBL’s share of the loan, which matured in December, is $80.9 million.

CBL said it anticipates Alamance Crossing in Burlington, North Carolina, will be imminently placed into receivership, which is a court-appointed status used to recover funds for creditors and help companies avoid bankruptcy. CBL emerged from Chapter 11 bankruptcy in November 2021, shedding about $1.7 billion in debt after filing the previous year.

In the case of Alamance Crossing, CBL said it would not recognize earnings or receive any cash flow while the property is in receivership. The 455,376-square-foot retail center is subject to a loan with an outstanding balance of $41.2 million, according to CoStar data. The loan failed to pay off at its maturity in July 2021. The REIT had previously said it was trying to secure a modification or extension of the loan.

CBL said it is also cooperating with the foreclosure of Westgate Mall in Spartanburg, South Carolina, with an outstanding current loan balance of $28.8 million. The loan failed to pay off at its maturity date last summer, according to CoStar data.

The REIT did not immediately respond to a request for comment from CoStar News

The 117-room La Quinta in Norman, Oklahoma, is among the refinanced properties. (CoStar)

Whittled Down La Quinta Portfolio Refinanced: Deutsche Bank and Goldman Sachs are set to provide a Cerberus Capital Management partnership with a mortgage to refinance 57 La Quinta hotels and a Wingate by Wyndham property, according to a Securities and Exchange Commission filing from Deutsche Mortgage. It would be the third CMBS financing for the extended-stay hotels in five years. The portfolio has gotten smaller with each CMBS deal as owners have been selling off properties from a one-time total of 314.

The lenders signed off Feb. 22 on a promissory note to provide the loan for the upcoming CMBS deal, LAQ 2023-LAQ. Among the properties backing the loan are the following La Quinta hotels:

  • 11 Ashley Point Drive in Charleston, South Carolina, 174 rooms.
  • 2750 Geyser Drive in Colorado Springs, Colorado, 131 rooms.
  • 46200 Landing Parkway in Fremont, California, 148 rooms.
  • 930 Ed Noble Parkway in Norman, Oklahoma, 117 rooms.
  • 303 Blum St., in San Antonio, 347 rooms.
  • 131 River Road, in Andover, Massachusetts, 168 rooms.

In May, Cerberus, in partnership with Highgate Hotels, acquired a portfolio of 124 hotel properties in the purchase of CorePoint Lodging. A $1.04 billion loan backing that deal was securitized at the time. Many of the properties tied to the loan were identified as noncore to eventually be sold. Cerberus has since completed the disposition of most of the properties. Its largest deal included the $1.1 billion sale of an 80% interest in 89 select-service and La Quinta hotels to Flynn Properties and Värde Partners.

A $1 billion loan was securitized in 2018 on what was then a 314-property portfolio owned by CorePoint. The company sold 205 underperforming properties before selling the remainder to Cerberus, according to S&P Global Ratings.

Cerberus did not respond to requests for additional information.