Top retail-mall owner Taubman has approached the market with a $1 billion CMBS deal to refinance the existing debt that is collateralized by the Dolphin Mall Miami, the Florida city's largest outlet center and one of the highest volume shopping centers in the U.S.
The TCO Commercial Mortgage Trust 2024-DPM deal is split into five tranches comprising a $702.4 million piece rated AAA by Fitch Ratings, $126 million piece rated AA-, a $99.6 million portion rated A-, a $21.4 million piece rated BBB+, and a $50 billion rated BBB.
The deal is co-originated by Wells Fargo Bank, Goldman Sachs and JP Morgan, with Wells Fargo acting as servicer and Situs Holdings as special servicer, according to Fitch, and Computershare Trust will serve as the trustee and certificate administrator.
DBRS Morningstar's presale report notes the mall has a stable occupancy trend, with year-end occupancy averaging 95.1% between 2020 and 2023, and property-wide occupancy never falling below 92%. The favorable occupancy is due in part to its proximity to Miami International Airport, making it a draw for tourists from South America, and a diverse roster of anchor tenants ranging from Bass Pro Shops to Ross Dress for Less to Nike Factory Store.
One concern, however, is high occupancy costs. While the average occupancy cost for in-line tenants is relatively low at 17.6% on sales for the year ended in September, DBRS said, 71 of its approximately 240 retailers experienced occupancy costs exceeding 30.0%
The rating agency also pointed to the property's concentrated lease rollovers between 2025 and 2027, when leases representing 44.1% of the mall's total net rental area (NRA) and 49.6% of the Morningstar DBRS gross rent are currently scheduled to roll.
"The lease rollover concentration occurring between 2025 and 2027 is coterminous with the loan's three one-year extension periods, evidencing a risk of cash flow instability and a reasonable challenge to refinancing at maturity," DBRS Morningstar said.
A key ratings driver, Fitch said in its presale report, is that net cash flow for the property is estimated at $105.2 million, 13.1% lower than the issuer's net cash flow. The rating agency described the loan's leverage as "moderate," with its Fitch stressed loan-to-value, debt service coverage ratio and debt yield respectively at 73.7%, 1.20 times, and 10.5%.
