The owner of Bethesda’s Westfield Montgomery, one of the largest malls in the D.C. region, has fully paid off its $350M loan, more than two years after it was transferred to special servicing.
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The loan was set to mature on Aug. 1 and marks a “rarity in a cycle” where malls continue to get loan extensions, according to special servicer commentary posted in Morningstar Credit’s database.
The 1.2M SF mall, owned by Paris-based Unibail-Rodamco-Westfield, was approved for redevelopment in 2020, but that has yet to get underway. A spate of new retailers have been opening in the mall this year, however.
It wasn’t immediately clear what URW’s plans are for the property now that the loan is paid off, and a URW spokesperson didn’t respond to a request for comment in time for publication.
URW secured the 10-year loan, which was tied to 836K SF of the property, in 2014. The mall received a two-year extension after missing the initial maturity date in August 2024.
“The net cash flow at Montgomery was still pretty far below the underwritten level and hadn’t really moved much over the past few years — sort of typical performance for malls that are getting extended,” David Putro, associate managing director at Morningstar, said in an email.
“Westfield has really pared down its US mall portfolio, so I assume they’re going to put money into what remains.”
In 2022, URW said it would sell its $13.2B U.S. portfolio by the end of 2023 due to financial struggles and the impact of the pandemic. But last year, the company changed course and said it would retain its 11 high-performing flagship malls in the U.S. while continuing to sell off its noncore assets.
Westfield Montgomery announced in July that it is expanding its list of retailers and restaurants throughout 2026, with additions including designer toy shop Pop Mart and soft pretzel chain Wetzel's Pretzels, which is coming soon.
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