A significant development has emerged at the Beverly Connection shopping center in Los Angeles, as retail giant Bloomingdale’s Outlet has formally agreed to lease 20,000 square feet in the complex. This addition marks a potential turning point for the center, which has struggled with its Commercial Mortgage-Backed Securities (CMBS) debt for several years.

New Retail Tenant in a Prime Location

Located at 100 North La Cienega Boulevard, Beverly Connection is strategically positioned between West Hollywood, Beverly Hills, and L.A.’s Fairfax District. The center occupies an ideal spot across from the renowned Beverly Center, at a key intersection in the historically significant TMZ (Thirty-Mile Zone) area.

The Bloomingdale’s Outlet is scheduled to open its doors later this year, enhancing the center’s appeal alongside existing off-price retailers such as Saks Off Fifth, Nordstrom Rack, TJ Maxx, and Ross.

Joe Press, Chief Operating Officer of Ashkenazy Acquisition Corporation, stated, “This world-class fashion brand fits in seamlessly with our curated roster of tenants filling an in-demand niche in the retail market.”

Challenges with Existing Debt

Ashkenazy Acquisition Corporation acquired Beverly Connection in 2014 for $260 million and secured a $210 million CMBS loan from Citigroup at that time. However, the financial landscape drastically changed with the onset of the COVID-19 pandemic in early 2020, which led to a notable decline in retail foot traffic.

As a result, the property’s debt, divided across three distinct CMBS pools (GSMS 2014-GC24, COMM 2014-CR20, and JPMBB 2014-C23), has remained under special servicing due to missed payment obligations. Recent appraisal efforts have further indicated a depreciation in the property’s value, with estimates dropping from $214 million to $193 million.

To address these financial issues, a reinstatement agreement was executed in late 2023; however, the debt continues to be managed by a special servicer. In addition to the senior loans, the property is associated with $35 million in unsecuritized subordinate debt, according to data from Morningstar Credit.