Retail

$76.5 Million UPB Non-Performing Mall Loan

Bellingham, WA United States
Asking Price Contact for pricing
Area Size
NOI Net Operating Income N/A
NIY N/A

Attributes

Loan Status Non-Performing
Loan Count 1
Current Interest Rate 8.23%
Maturity Date 2022-02-07
Property Type Retail

Asset Description

Jones Lang LaSalle ("JLL"), in conjunction with RI Marketplace, is pleased to announce the sale of a $76.5 million non-performing loan (the "Loan"). The Loan was originated in June 2011 with a fixed interest rate of 5.23%, with payments made on a 30-year amortization schedule with a maturity date of February 2022. The Loan features a hard lockbox that has been in place since origination. The Loan entered maturity default in February 2022 when the Borrower failed to pay off the Loan triggering an all-in default rate of 8.23%.


A first lien mortgage secures the Loan on a 536,354 SF portion (“Collateral”) of a 774,264 SF mall (“Mall”) in northwestern Washington, 1.5 hours north of Seattle and 25 minutes south of the Canadian border. The Collateral, constructed in 1988 and renovated in 2015, is currently 87.7% leased with inline sales of $396/SF as of the T-12 ending February 2022. Two of the five anchor spaces are included in the Collateral property, which includes Dick’s and Macy’s, while Target, JC Penny, and Kohl’s are responsible for CAM.

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Investment Highlights

RESOLUTION OPTIONALITY: The Loan was performing through COVID until it reached maturity default in February 2022. The prior performing status, coupled with the Loan’s maturity default and current non-performing status, allows investors a wide array of potential resolution scenarios, either through a loan modification or Collateral foreclosure.


STRONG CONCENTRATION OF NATIONAL RETAILERS: The Mall features numerous unique-to-market retailers that have their only location in the Bellingham market, including Target (nearest location 27 miles south), Kohl’s (27 miles south), Dick’s Sporting Goods (28 miles south), Ulta Beauty (51 miles south), JCPenney (58 miles south), Macy’s (76 miles south), and H&M (76 miles south) among others.


STRATEGIC LOCATION WITH EXPANSIVE TRADE AREA: The Mall is located approximately 90 miles north of Seattle, Washington, and 20 miles south of the international border with Canada. The Collateral is ideally situated off Interstate-5 at the highly trafficked (100,000 VPD) interchange of Interstate-5 and State Route 539 / Guide Meridian Road (the major north/south highway). As the only regional mall in northwestern Washington, Bellis Fair benefits from an expansive trade in excess of 30 miles and into Canada. The 30-mile trade area population exceeds 370,000 residents that grows to more than 500,000 including Canadian residents.


ESTABLISHED DEMAND DRIVERS: The Collateral is the dominant retail center within the northwest Washington market and benefits from its proximity to the Canadian border near Western Washington University with an enrollment of over 16,000 students and near the Alaska Ferry, Mount Baker, and the Salish Sea, which collectively drives substantial tourism.


DURABLE INLINE SALES PRODUCTIVITY: Small shop sales at the Property have consistently been either side of $400/SF going back to 2018 and trending up since a dip in 2020 related to COVID-19. This sales productivity highlights the Property’s solid footing and prominent position in its trade area.


HEALTHY AND SUSTAINABLE OCCUPANCY COSTS: Average inline occupancy costs are approximately 11.2%, well within the benchmark range of occupancy costs for a regional mall generating inline sales of ~$400/SF.

Last Updated Date: 28 Jul 2022

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Last Updated Date: 28 Jul 2022

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