Aventura Mall has stood out as a success story in a mall landscape battered by competition from e-commerce and shifting consumer preferences.
The 37-year-old mall — the largest in Florida — was recently ranked as the second most-visited shopping center in the country with more than 28 million annual visitors, including a notable concentration of foreign shoppers from South America, Mexico and Europe.
The pandemic has complicated things, of course. The mall shut down during the early days of the outbreak in March, and partially reopened two months later. The movie theater at the complex reopened just two weeks ago as Miami-Dade county entered Phase 2 of its reopening.
The Soffer family’s Turnberry Associates, which developed the property in 1983, retains a two-thirds majority stake in the mall while Simon Property Group owns the remaining third. The owners completed a $230 million, 226,000-square-foot expansion at the mall in 2017, and landed a $1.75 billion refinancing for it the following year.
That financing was distributed into several mortgage-backed security transactions, and rating documents associated with the securitization provide an inside look at the property’s finances.
The 2.2 million-square-foot mall was 91.9-percent leased to more than 300 tenants as of last September, according to the latest surveillance report from Kroll Bond Rating Agency. Four of the complex’s anchor tenants — two Macy’s spaces, Bloomingdales and Nordstrom — own their own buildings subject to ground leases from the mall owner, and those spaces are not part of the collateral for the mortgage.
The property’s fifth anchor tenant is J.C. Penney, whose base rent comes out to just $3.41 per square foot for 194,000 square feet of space. The department store chain filed for bankruptcy in May, though its location at the Aventura Mall has not been included on any store closure list, according to Kroll. The mall’s minority owner Simon Property Group, along with Brookfield Property Group and Authentic Brands, are reportedly in talks to acquire the retailer.
The next largest tenant by square footage is an AMC movie theater. The theater chain has been struggling massively due to the pandemic, and recent SEC filings raised “substantial doubt” about its “ability to continue as a going concern.” The AMC at Aventura Mall reopened this month, and moviegoers are required to wear masks at all times — which means no food or drink is allowed.
Other tenants that are facing hard times include Forever 21, whose sub-brand XXI Forever has a store at the mall. The fast-fashion retailer had inked a three-year renewal at the mall — reducing rent from $70 to $62 — shortly before declaring bankruptcy last fall. Victoria’s Secret also plans to close hundreds of stores across the country after a deal to sell the company fell through in the early days of the pandemic.
Despite challenges posed by coronavirus, the property has remained current on loan payments and has not appeared on servicer watchlists for Covid relief. (Some other large malls that were thriving before the pandemic, like Minnesota’s Mall of America, have had a much harder time.)
The mall’s parking lot is now home to a drive-in coronavirus testing site, and a “COVID-19 Essentials” pop-up store at the mall sells products like hand sanitizer, face masks and “non-contact door openers.” Construction on a new Brightline station next to the mall kicked off this month following pandemic-related delays, and is set to improve the site’s connectivity to downtown Miami.
Turnberry co-CEOs and siblings Jackie and Jeffrey Soffer split up to pursue individual projects last year. Jackie retained the Turnberry Associates brand and principal ownership of the Aventura Mall, while Jeffrey became head of a separate company, Fontainebleau Development. Kroll data indicates Jeffrey is still one of the guarantors for the Aventura Mall loan, along with Simon and Jackie.