The Westminster Mall, a sprawling retail complex spanning 1.2 million square feet in the city of Westminster, is grappling with financial turmoil as its loan has been placed in special servicing. Washington Prime Group, the property’s owner, is close to defaulting on its $85 million linked to the mall, The Real Deal reported.
The floating-rate loan for the mall was extended by JPMorgan Chase in 2014 and subsequently bundled into a commercial mortgage-backed securities pool. The mall, once a thriving hub, has faced challenges in recent years attributed to declining rental income and escalating mortgage payments, particularly as interest rates have risen. This financial strain on the property has been evident for some time, with the debt service coverage ratio falling below one by the end of last year, signifying an inability to generate sufficient income to meet debt obligations.
According to the report, net operating income for the mall was negative from January through September of last year, with the borrower reporting a negative cash flow of $1.4 million. Despite being given an opportunity to settle the loan in November, Washington Prime, the owner of the mall, did not take action. The loan is scheduled to mature in April, adding urgency to the situation.
Situated at 1025 Westminster Mall, the property is home to prominent retailers such as Target, Old Navy, Forever 21, and Designer Shoe Warehouse, among others. It has struggled previously with large vacant spaces. However, in more recent times, these spaces have seen potential for new life. In one such instance, Shopoff Realty Investments acquired the vacant Sears store at the mall for $46.3 million in 2022 and unveiled plans to transform the space into a residential community comprising 1,200 homes.
