New Bloomingdale’s Outlet to Revitalize Beverly Connection Amid Debt Challenges
A shopping center in Los Angeles, known as Beverly Connection, is set to welcome a new tenant as it continues to navigate years of financial distress linked to its commercial mortgage-backed securities (CMBS) debt burden. The arrival of Bloomingdale’s Outlet is expected to provide some much-needed relief for the center.
Details of the Lease
Bloomingdale’s, the off-price retail chain operated by the iconic retailer, has signed a lease for a 20,000 square-foot space within the 340,000-square-foot Beverly Connection complex. Located at 100 North La Cienega Boulevard, this shopping center is strategically positioned between Beverly Hills, West Hollywood, and Los Angeles’ Fairfax District, directly across from the renowned Beverly Center. This area is well-known for its high foot traffic and is considered part of the historic TMZ (Thirty-Mile Zone).
Strategic Fit Among Retail Tenants
The new Bloomingdale’s Outlet is anticipated to open its doors later this year, adding to the roster of various off-price retailers already present at the complex, including Saks Off Fifth, Nordstrom Rack, TJ Maxx, and Ross. Joe Press, Chief Operating Officer of Ashkenazy Acquisition Corporation, expressed enthusiasm about the addition, stating, “This world-class fashion brand fits in seamlessly with our curated roster of tenants filling an in-demand niche in the retail market.”
Historical Context and Financial Struggles
Ashkenazy Acquisition Corporation, the owner of Beverly Connection since acquiring it for $260 million from Vornado Realty Trust in 2014, has faced significant challenges in the years since. The firm secured a substantial 10-year, $210 million CMBS loan from Citigroup, but the landscape shifted dramatically with the onset of the COVID-19 pandemic in early 2020, which led to diminished foot traffic and revenue.
Due to payment delinquencies, the property’s debt has been managed under special servicing across three CMBS deals: GSMS 2014-GC24, COMM 2014-CR20, and JPMBB 2014-C23. A recent appraisal noted a decline in property value from $214 million to $193 million, according to Morningstar Credit. Although a reinstatement agreement was made in late 2023, the debt remains with the special servicer, continuing to complicate the center’s financial status. Additionally, about $35 million of unsecuritized subordinate debt is also associated with the property.
Conclusion
The opening of Bloomingdale’s Outlet at Beverly Connection may serve as a critical turning point for the shopping center as it seeks to recover from its financial setbacks. With a growing base of valued retailers and this new addition, there is cautious optimism for improved performance as the retail landscape resumes post-pandemic.
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