Simon Property delinquent on $300M loan for Mission Viejo mall

Trepp sees “serious headwinds in the market to refinance this asset” in OC

Simon Property Group's David E. Simon with 555 The Shops Avenue
Simon Property Group's David E. Simon with 555 The Shops Avenue (Google Maps, Getty)

Simon Property Group is delinquent and seeks an extension on a $295 million loan backed by a nearly 160-store shopping mall in Mission Viejo.

The Indianapolis-based retail center owner is in special servicing after its loan came due for The Shops at Mission Viejo at 555 The Shops Avenue, the Commercial Observer reported, citing an alert from Trepp. The lender was undisclosed.

Special servicing is a step before potential foreclosure of the 1.2-million-square-foot indoor shopping center.  

If Simon Property doesn’t pay its bills, short-term forbearance could come into play, according to the Observer, with the lender seizing control of the 67-acre property.

The loan was slated to mature on Feb. 1, according to a Feb. 6 filing with the Securities & Exchange Commission.  

That filing shows Simon as 51-percent owner of the mall. The minority owners include a joint venture between an affiliate of Miller Capital Advisory and the California Public Employees’ Retirement System, or CalPERS. 

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When securitized, the shopping center near Crown Valley Parkway and Interstate 5 was valued at $543 million, according to Trepp. Refinancing was predicted to be a challenge last year. 

There are “serious headwinds in the market to refinance this asset … [and] market is tough as you can imagine,” Trepp said, citing watchlist comments from late last year.

The two-story Shops at Mission Viejo, which opened in 1979 as the Mission Viejo Mall, is now anchored by Macy’s and Nordstrom. There are no looming lease expirations among top tenants. 

Simon Property Group, a real estate investment trust based in Indianapolis, is the largest shopping mall operator in the country, and it manages shopping, dining, entertainment and mixed-use properties around the world.

Earlier this month, the company said its portfolio’s occupancy rate was at 95 percent by the end of the fourth quarter last year, up 1.5 percent compared to 2021. Its base minimum rent per square foot was $55.13, which is 2.3 percent higher than the year prior, according to the Observer.

Simon officials didn’t return requests for comment from the commercial real estate news site.

— Dana Bartholomew