The owner of the massive Westfield Montgomery mall in Bethesda has received a two-year extension on a $350M loan after it didn't pay off its debt ahead of its August maturity.

The 836K SF property tied to the loan also received a new valuation that cuts it nearly in half from a decade ago, according to Morningstar Credit.

The owner, Paris-based Unibail-Rodamco-Westfield, has until August 2026 to pay off its extended loan on the mall, which now has an outstanding balance of $333.5M. With the extension, the owner agreed to an immediate payment of $16M and an additional $5.5M to be paid over the next two years.

The extension comes after the loan was transferred to special servicing in April, four months ahead of its August maturity.

The new valuation on the property is $353M, down from $680M when the loan was securitized in 2014, according to Morningstar.

URW didn't respond to a request for comment before publication.

“While the new appraisal is a very healthy haircut to the original, the fact that it’s above the outstanding balance is a positive in the current environment,” Morningstar Credit Senior Vice President David Putro wrote in an email to Bisnow.

“The loan’s not out of the water by any means — 2023 cash flow was still $10 million below the underwritten level from 2014, but the extension and paydown was [a] half-decent development for the time being,” he added.

The mall totals 1.3M SF, but URW’s footprint excludes Nordstrom, Macy’s and Macy’s Home, the property’s anchor tenants. URW's portion was 80% occupied as of the end of June, down from 94% at the end of last year.

URW plans to redevelop Westfield Montgomery into 2.9M SF of retail and 717 residential units. But more than four years after it received approval for those plans in the summer of 2020, the owner has yet to begin construction.

Putro said the extension gives URW time to stabilize the property before the redevelopment.

“From a credit side, it’s a good sign that they came out of pocket to pay the loan down as part of this loan modification as it shows some dedication to the property,” he said.