Worldgate Centre, the Herndon retail center anchored by an AMC movie theater and a large athletic club, sold for $28.2 million at a competitive foreclosure auction on Monday. The sale closes out a long slide for a property once valued at nearly $90 million, after its owner defaulted on the loan tied to the shopping center.
The property sold to the credit bidder, according to The Business Journals, which first reported the sale price Monday. Worldgate Centre sits in Herndon, Virginia, roughly 24 miles northwest of Washington, D.C., and spans an anchored retail footprint that KBRA has put at 229,326 square feet, per the credit rating agency’s filings on the property’s mortgage. The center is anchored by the AMC Worldgate 9 theater and the Worldgate Athletic Club & Spa, according to Greater Reston Living, which reported that about 30 businesses occupied nearly all of the property’s square footage as of mid-September.
A Loan That Unraveled Over Two Years
The trouble traces back to late 2024. The property’s owner disclosed in December of that year that it would no longer fund the loan, The Business Journals reported in an earlier piece on the looming auction. KBRA’s records show the loan had already transferred to a special servicer in January 2024, ahead of a May 2024 maturity date, and that it went into payment default that December. The servicer and borrower subsequently struck a forbearance agreement running through July of this year, with the borrower signaling interest in receivership and a consensual foreclosure rather than a prolonged fight, according to KBRA’s publication on the loan.
Reported figures on the outstanding balance vary by source. Greater Reston Living put the owner’s debt at about $50 million on a $65 million loan originally taken out in 2016, while KBRA’s own analysis cited a $51.9 million loan balance in projecting an estimated loss of $33.6 million, a 64.8% loss severity, on that debt.
Value Cratered From Boom-Era Highs
The scale of the collapse shows up starkly in the appraisals. Greater Reston Living reported that Worldgate Centre’s appraised value fell from $88.5 million in 2014 to $23.9 million as of March of this year. KBRA, meanwhile, cited an October 2024 appraisal that valued the property at $26.0 million, or $113 per square foot, calling that figure 70.6% below the $88.5 million appraisal recorded at the loan’s issuance. KBRA has classified the loan as a K-LOC designation and rated its performance as Underperform, citing the maturity default and its status with the special servicer…