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The domain in Austin with David Simon, CEO of the Simon Property Group (Simon Property)
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Eight miles north of Austin’s central business district, the Domain shopping mall complex is near one of the city’s major technology corridors, where companies like Apple, Amazon, Facebook and IBM drive demand.
The 1.2 million square meter open-air lifestyle center, which was built by Simon Property Group in 2007 and expanded in 2010, has more than 1 million square meters of retail space, 156,000 square meters of office space and 828 apartments. From 2015 to 2018, the owner spent an additional $ 14 million on renovations.
Last month, Simon refinanced an 887,000 square foot piece of the complex with a $ 210 million conduit loan from Bank of America and Goldman Sachs. Documents related to the securitization provide insight into the property’s finances, including the way she weathered the pandemic.
According to DBRS Morningstar, 91 percent of the loan collateral was rented to more than 110 tenants in June, including high-end fashion outlets, fast-casual and fine-dining restaurants, fitness tenants, salons and homeware stores. According to S&P Global, 100 percent of the office space was let to 13 tenants.
Two of the anchors, Dillards and Macy’s, are not part of the collateral. The largest secondary tenant, Dick’s Sporting Goods from Pittsburgh, has been in the property since 2009. The second largest recently restructured Neiman Marcus has been a tenant since 2007.
An eight-screen IPIC cinema that has restaurants and a bar is the domain’s fifth anchor tenant. Several high-end retailers like Louis Vuitton have their only Austin locations on the domain. The complex has 72,800 square meters of restaurant space.
Office tenants live on the upper floor of the property. The largest is the Hanger Orthopedic Group, an orthopedic and prosthetic service provider with headquarters since 2010. Other tenants include the law firm Cantilo & Bennett, the credit card company Mercury Financial and the childcare software company Brightwheel.
The complex has four hotels and two residential buildings that are not part of the collateral. The retail component includes several children’s play areas and outdoor fireplaces, as well as a green space that hosts events under an LED-lit structure.
Simon closed all of his malls in the early days of the pandemic, although the domain reopened fairly quickly – May 1, 2020. More than 50 renters received rent reductions or deferrals, and most of the deferred rents were paid back in full. Rental income from April to December fell to 71 percent, but had recovered to 99 percent by June.
Several retailers saw strong sales despite the pandemic, with Louis Vuitton grossing more than $ 6,000 per square foot in 2020, according to Fitch Ratings. Lululemon, Kendra Scott, and Tiffany’s each topped $ 1,700 per square foot last year.
Inline tenants (under 10,000 square feet) had revenue of $ 686 per square foot in 2019, but only $ 476 in 2020, according to DBRS.
According to S&P, the north end of the complex, known as Domain I, “appears to serve a younger crowd with bars and luxury retailers,” while the south end, Domain II, is more service-oriented and has more empty storefronts.
Letting activity has remained strong despite the pandemic, and 30 new and extended leases have been signed since 2020, covering a total of more than 140,000 square meters.
“While regional malls have struggled over the past few years, and particularly during the coronavirus pandemic, DBRS considers Morningstar [Domain] to be a resilient destination in a strong and growing market, ”wrote the DBRS analysts. “Overall, the property is an attractive asset in a booming Austin market.”
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