The owner of Westfield Montgomery Mall in Bethesda has fully paid off a $350 million loan tied to the property, more than two years after the loan was transferred to special servicing, according to a report from Bisnow.
The 1.2 million SF mall is owned by Paris-based Unibail-Rodamco-Westfield (URW). According to Bisnow, URW secured the 10-year loan in 2014, with the financing tied to 836,000 SF of the property. The loan originally matured in August 2024 but received a two-year extension before being paid off ahead of its August 2026 maturity date.
Bisnow reported that Morningstar Credit described the payoff as a “rarity in a cycle” in which mall loans have frequently received extensions. David Putro, associate managing director at Morningstar, told Bisnow that the property’s net cash flow remained well below the level projected when the loan was originated and had not changed significantly in recent years.
The payoff comes several years after URW announced plans to substantially reduce its U.S. portfolio. In 2022, the company said it intended to sell its $13.2 billion portfolio of U.S. properties by the end of 2023. Those plans later changed, with URW deciding to retain 11 high-performing flagship malls in the United States while continuing to sell noncore properties.
The loan payoff also came right before Westfield Montgomery prepares to implement a new Parental Guidance Policy beginning Monday, September 28. Under the policy, visitors under 18 must be accompanied by an adult age 21 or older after 3pm daily. One supervising adult may accompany up to four minors. The same policy will also take effect at Westfield Wheaton.
Westfield Montgomery was also previously approved for a significant redevelopment. Plans approved in 2020 called for transforming portions of the property into a mixed-use development featuring multifamily housing, open-air retail and restaurants, pedestrian promenades, connected walkways, parks and family areas. The future of those plans remain undecided.
As we reported in 2023, URW had indicated it was continuing to invest in its top properties, including development projects at Westfield Montgomery. Westfield described its plans as creating a mid-rise, multifamily and amenity-rich community alongside the existing mall, with new dining, shopping, entertainment and outdoor spaces.
That larger redevelopment has yet to begin, according to Bisnow, but Westfield Montgomery has continued adding retailers and restaurants. It is not yet clear what URW plans for Westfield Montgomery following the $350 million loan payoff. Bisnow reported that a company spokesperson did not respond to its request for comment prior to publication.
