

Goldman Sachs and Deutsche Bank-affiliated DBR Investment last week launched a $700 million retail single-asset, single-borrower commercial mortgage loan on behalf of a joint venture between Macerich and Institutional Mall Investors. The five-year, fixed-rate SASB deal is secured by Scottsdale Fashion Square, a strong-performing retail property in Scottsdale, Arizona.
New-York-based Fitch Ratings highlighted some positive fundamentals in the deal, including a Fitch-stressed debt service coverage ratio of 1.43x and loan-to-value ratio of 61.1 percent. While $403.9 million of the loan will refinance the previous 10-year fixed-rate debt secured by the property, $274.5 million of the loan will be returned in equity to the borrower, and the rest will be used to fund other outstanding costs.
The agency has a deteriorating outlook on the retail sector, noting that it is facing some macroeconomic headwinds as customer spending decreases over rising prices and recession concerns. However, Fitch believes Scottsdale Fashion Square is a high-quality asset that produced overall revenue of $849.1 million in 2022. The property is 96 percent occupied and leased by more than 200 tenants.
Loans with shorter terms are gaining momentum across CMBS as borrowers want to maintain the ability to refinance without being locked into longer maturities. This is evidenced by the first-ever five-year conduit deal originated by a consortium of lenders including Deutsche Bank, Citi Real Estate Funding and Barclays Capital Real Estate last month.
Manus Clancy, senior manager and analyst at New York-based data provider Trepp, said that although five-year terms are more common in SASB deals, he believes the trend toward shorter-term deals will continue as long as rates remain high.
“There has been a tendency to make SASB deals with both floating rate and shorter terms [in the] last five years,” Clancy said, noting that Scottsdale Fashion Square’s fixed-rate term is another highlight of the loan.