Friendship Heights Mall Heading To Foreclosure Auction

The Mazza Gallerie mall at 5300 Wisconsin Ave. NW.
The Mazza Gallerie Mall At 5300 Wisconsin Ave. Nw.

Investors looking to scoop up distressed retail assets during the coronavirus crisis appear to have a new opportunity in Northwest D.C.

The Mazza Gallerie Mall at 5300 Wisconsin Ave. NW in Friendship Heights is being offered in an Aug. 28 substitute trustee's sale scheduled by Alex Cooper Auctioneers on behalf of the property's lenders, the Washington Business Journal reports.

Ashkenazy Acquisition Corp. acquired the property for $78M in 2017, and it secured $67.1M in loans along with the deal. The lenders, Annaly CRE Holdings LLC and Annaly CRE LLC, said the loans matured in January and Ashkenazy has failed to repay the debt, WBJ reported.

In June, Ashkenazy sought a restraining order on the foreclosure, arguing in court that it was protected by D.C.'s emergency order requiring lenders to grant deferrals on payments to borrowers who have been financially impacted by the pandemic. The owner says it has lost more than $533M in revenue at the property because of the restrictions D.C. placed in response to the coronavirus.

D.C. Superior Court Associate Judge Florance Pan denied the request for a restraining order, siding with the lenders, who argued that the borrower defaulting on the loan in January means it is not eligible for the emergency deferral order.

The 294K SF shopping center sits at the corner of Wisconsin Avenue and Western Avenue, on the D.C. side of the border with Maryland. At least three of its retail tenants remain temporarily closed: Saks Fifth Avenue, T.J. Maxx and Neiman Marcus, which is going through bankruptcy proceedings. The property also features an AMC Theatres and several smaller retail and restaurant tenants.

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