The Mazza Gallerie bought for $38 million to the best bidder in a foreclosures public sale Friday after its proprietor, an affiliate of New York’s Ashkenazy Acquisition Corp., defaulted on $67.1 million in loans it took out to amass the 294,000-square-foot retail middle in Northwest D.C.
Representatives for the Friendship Heights property’s lenders, associates of Annaly Industrial Actual Property Group Inc., forged the profitable bid during an auction held outside the D.C. office of Alex Cooper Auctioneers. It drew a crowd of greater than a dozen socially distanced onlookers donning private protecting gear to look at regardless of the late August morning’s warmth and humidity.
An undisclosed bidder conferring through cell phone with one other occasion ran the value up from a $26 million beginning provide in a back-and-forth that went no increased than the $38 million supplied by the consultant for Annaly Industrial Actual Property, a subsidiary of publicly traded Annaly Capital Administration (NYSE: NLY). A sole consultant for Ashkenazy, Bethesda lawyer Tom Helf, was in attendance however stated nothing through the proceedings and declined to remark for this story.
The consultant for Annaly declined to remark following the public sale and referred inquiries to the corporate’s headquarters in New York, the place nobody was instantly accessible for remark.
Friday’s public sale will possible kick off a interval of uncertainty for Mazza Gallerie as Annaly officers think about choices together with a possible resale of the property as soon as market situations approve. A mortgage actual property funding belief, Annaly’s business actual property arm originates and invests in business mortgage loans and different forms of debt, and its holdings largely represent retail and well being care properties.
Annaly Capital held $2.5 billion in belongings on the shut of the second quarter, and whereas it didn’t get away these belongings, D.C. represented lower than 10% of its geographic focus. Amongst its holdings regionally, as of Dec. 31, had been a multifamily property within the District and well being care amenities in Gainesville and Manassas. The corporate has usually maintained a fairly low profile within the D.C. area however made information two years in the past with its $900 million acquisition of Bethesda-based MTGE Investment Corp., a hybrid mortgage actual property funding belief by means of which it inherited a number of well being care websites.
Legal professionals for Ashkenazy, which acquired Mazza Gallerie in 2017, had filed a movement with the D.C. Superior Court docket in June in search of to halt the potential foreclosures of the property at 5300 Wisconsin Ave. NW. They stated the District authorities had enacted protections requiring lenders to grant hardship deferrals on lease and mortgage funds to debtors whose funds had been harm by the continuing coronavirus outbreak.
Annaly countered that the Ashkenazy associates, Prime Chevy Chase Asset 1 LLC and Prime Chevy Chase Mezz Borrower LLC, defaulted on their money owed when the loans matured in January, earlier than the area’s financial system was affected by the pandemic or lockdown restrictions had been put in place by the District. A Superior Court docket affiliate decide sided with Annaly in denying Ashkenazy’s request for a brief restraining order.
The pandemic is simply the newest in a sequence of challenges for the brick-and-mortar retail business, which has confronted rising competitors from on-line retailers working with decrease overhead prices. Ashkenazy misplaced a number of retailers over the previous few years together with Harriet Kassman, Williams Sonoma and Filene’s Basement, although T.J.Maxx took over that house in 2013.
The general public well being disaster has served to exacerbate these challenges, resulting in many high-profile bankruptcies, J.Crew, Gold’s Health club, Neiman Marcus, J.C. Penney, Le Ache Quotidien, Chuck E. Cheese, New York & Co., Ann Taylor, Lane Bryant, California Pizza Kitchen, Lord & Taylor, Males’s Wearhouse and Jos. A. Financial institution amongst them.
The rising checklist of retail bankruptcies additionally contains division retailer Neiman Marcus, a Mazza Gallerie anchor that sought Chapter 11 chapter safety in Could and whose lease there may be at the moment being marketed for sale, and Lord & Taylor, whose close by Chevy Chase retailer is slated to shut as that storied division retailer firm shuts down its remaining shops.