A $140.5M loan on the MainPlace mall in Santa Ana has headed to special servicing ahead of a planned redevelopment that the mall's owners hope will boost its performance.

Centennial Real Estate and USAA Real Estate’s loan on the 1.1M SF mall is now overseen by KeyCorp Real Estate Capital Markets, The Real Deal reported, citing information from DBRS Morningstar.

Centennial and USAA requested an extension on the loan, which matures this month. The loan was taken out in 2012 by Westfield, the owner at the time.

Centennial and USAA, like many regional mall owners, plan to redevelop the mall with apartments, offices and other nonretail uses.

What was once envisioned as a $300M project is now expected to cost $500M, the Orange County Register reported. Groundbreaking for a 300-unit apartment complex that was the first wave of the plan took place in January.

The planned improvements could “salvage performance” of the mall, according to TRD, which cited the ratings agency's report. Net cash flow at the property dropped 31% in 2021 from 2020, the report said.

DBRS Morningstar anticipated a roughly $32M loss on the loan unless the property experienced a significant turnaround, The Real Deal reported.

The agency's monthly highlights, published on Tuesday, noted that across the country, regional mall loans are a particular weak point.

"Chief among our maturity concerns is underperforming regional mall loans, which total nearly $1.4 billion and account for nearly one-quarter of maturing retail loans this year," the report stated.