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Eight miles north of Austin’s central business district, the Domain shopping center complex sits near one of the city’s main technology corridors, where companies such as Apple, Amazon, Facebook and IBM are driving demand.
The 1.2 million-square-foot open-air lifestyle center, built by Simon Property Group in 2007 and expanded in 2010, features more than 1 million square feet of retail, 156,000 square feet of office and 828 apartments. The owner spent another $14 million on renovations from 2015 to 2018.
Last month, Simon refinanced an 887,000-square-foot piece of the complex with a $210 million conduit loan from Bank of America and Goldman Sachs. Documents associated with the securitization provide an inside look at the property’s finances, including how it weathered the pandemic.
As of June, the loan collateral was 91 percent leased to more than 110 tenants, including high-end fashion outlets, fast-casual and fine-dining restaurants, fitness tenants, salons and home goods stores, according to DBRS Morningstar. The office space was 100 percent leased to 13 tenants, according to S&P Global.
Two of the anchors, Dillard's and Macy’s, are not part of the collateral. The largest collateral tenant, Pittsburgh-based Dick’s Sporting Goods, has been at the property since 2009. The second largest, recently restructured Neiman Marcus, has been a tenant since 2007.
An eight-screen IPIC theater, which features dining and a bar, is the Domain’s fifth anchor tenant. Several high-end retailers, such as Louis Vuitton, have their only Austin locations at the Domain. The complex has 72,800 square feet of restaurant space.
Office tenants occupy the upper level of the property. The largest is Hanger Orthopedic Group, an orthotic and prosthetic service provider that has been headquartered at the center since 2010. Other tenants include law practice Cantilo & Bennett, credit card company Mercury Financial and childcare software firm Brightwheel.
The complex has four hotels and two residential buildings, which are not part of the collateral. The retail component includes several children's play areas and outdoor fireplaces as well as a green space that hosts events under an LED-lit structure.
Simon closed all of its malls in the early days of the pandemic, although the Domain was able to reopen rather quickly — May 1, 2020. More than 50 tenants received rent abatements or deferrals, and most deferred rent has been paid back in full. Rent collections from last April to December dipped to 71 percent, but had recovered to 99 percent by June.
Several retailers enjoyed strong sales despite the pandemic, with Louis Vuitton pulling in more than $6,000 per square foot in 2020, according to Fitch Ratings. Lululemon, Kendra Scott, and Tiffany’s each exceeded $1,700 per square foot in sales last year.
According to DBRS, in-line tenants (under 10,000 square feet) reaped $686 per square foot in sales in 2019 but only $476 in 2020. For the 12-month period beginning last May, sales were $586 per square foot, indicating an upward trend.
According to S&P, the north end of the complex, known as Domain I, “appears to cater to a younger crowd with bars and luxury retailers,” while the south end, Domain II, is more service-oriented and has more vacant storefronts.
Leasing activity has remained strong despite the pandemic, with 30 new and renewal leases totaling more than 140,000 square feet signed since 2020.
“While regional malls have struggled over the last several years, and especially during the coronavirus pandemic, DBRS Morningstar considers [Domain] to be a resilient destination asset in a strong and growing market,” DBRS analysts wrote. “Overall, the property is an attractive asset in a booming Austin market.”