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Owner Of Mall Near Amazon HQ2 Lands $450M Refinancing Deal

The Fashion Centre at Pentagon City mall, with the Ritz-Carlton hotel on the left and the office building in the background.

A mixed-use use property near Amazon HQ2 featuring a shopping mall, hotel and office building is the collateral behind a huge new CMBS loan. 

The owner of Fashion Centre at Pentagon City, a joint venture of Simon Property Group and Institutional Mall Investors, landed $455M in CMBS debt from Wells Fargo, Commercial Observer reported, citing a Fitch Ratings analysis

The loan is backed by the 648K SF Fashion Centre at Pentagon City mall, plus the adjacent 170K SF Metro Tower at Pentagon City Office building and a fee interest in the adjacent Ritz-Carlton Pentagon City. The hotel itself, owned by Xenia Hotels & Resorts, was not part of the collateral. 

The refinancing deal values the property at $926M, based on a loan-to-value ratio of 49.1%, according to Fitch Ratings. The loan has a three-year initial term with two one-year extension options. 

The ownership group also includes Miller Capital Advisory and California Public Employees' Retirement System. The mall, built by Melvin Simon & Associates and Rose Associates, opened in 1989

The Fashion Centre, anchored by Macy's, Nordstrom, Zara and other retailers, is 84.6% occupied as of this month, and its rent collections averaged 76% in the second half of last year, according to Fitch Ratings, which noted that several tenants have filed for bankruptcy or aren't expected to reopen. The 12-story office building is 75% occupied by the Rand Corp., but the top three floors are vacant. 

The property sits next to the Pentagon City Metro station and less than a half-mile from where Amazon is currently building out the first phase of its second headquarters. Amazon real estate head John Schoettler told Bisnow last month the company plans to return to the office "pretty much as we were pre-Covid," and it remains committed to the hiring targets it set for HQ2. It has already hired around 1,600 people to work in leased space in the neighborhood.