Lender seeks to own Park Plaza
The owner of the Park Plaza shopping center defaulted on a nearly $ 100 million loan on the property, which led his lender to apply for the property and appoint a receiver with the intention of selling it, according to a complaint filed in Pulaski County Circuit Court.
Deutsche Bank Trust Company Americas has filed a lawsuit against Park Plaza Mall CMBS LLC, which is a related entity of CBL Properties Inc. of Chattanooga, Tennessee, which owns and operates more than 100 malls and shopping centers in 26 states.
Deutsche Bank asked circuit judge Alice Gray to immediately appoint Frederick J. Meno, an executive at a real estate company in Fort Worth, Texas as receiver, a move the bank said was due to the decision of the owner of the mall to close and relinquish the property if a receiver is not soon appointed. “
Meno is “ready and willing to serve as receiver to gain control and possession of [Park Plaza] and reporting rents and supervising and managing the property ”, as well as paying“ necessary expenses ”to maintain the property, rent the available space, market the property and ultimately sell it, with“ court permission ” .
The owner of the mall did not object to the appointment of the receiver, according to court documents.
The action stems from a $ 99.4 million loan that the original lender, Wells Fargo Bank, made to Park Plaza in March 2011. The loan was awarded to Deutsche in July of the same year, according to the lawsuit. , which was first reported by Arkansas Business.
Park Plaza defaulted on the loan after failing to make a payment owed almost a year ago, in April 2020. Deutsche Bank sent Park Plaza a notice of default on April 7, 2020.
Park Plaza has since informed the bank that “the performance of the property does not allow [Park Plaza] to maintain and operate the property and to pay the debt service on the loan, that there is no additional source of capital to finance the debt service and operations and that [Park Plaza] will close the mall if [Deutsche Bank] does not allow the property’s operating expenses to be paid from rents before debt service payments, ”the lawsuit said.
The lawsuit came four months after CBL Properties filed for its long-awaited Chapter 11 bankruptcy to restructure debt and wipe $ 1.5 billion off its balance sheet.
CBL said earlier in the year that it had struck a restructuring deal with a group of lenders, a move the company said was aimed at strengthening its balance sheet and keeping its 107 malls, squares and shopping centers open. .
Upon filing for bankruptcy in November, CBL said the move would give the company a chance to continue operating while reorganizing its finances and operations. It lists estimated assets of $ 1 billion to $ 10 billion and estimated liabilities in the same range.
The move is the latest sign that the retail landscape continues to be disrupted by the migration of consumers to e-commerce. Another hurdle for Park Plaza and other malls has been the covid-19 pandemic that has forced shopping malls to close or reduce hours of operation.
CBL acquired Park Plaza in 2004 for $ 77.5 million.
The mall covers 547,000 square feet, including two Dillard locations that were not part of the sale. Dillard’s has its stores on the site.
The Park Plaza site was developed in 1959 and was eventually redesigned and became a regional shopping center closed in 1988.
The foreclosure lawsuit comes three months after Park Plaza went to circuit court to have the value of its appraised property reduced from $ 63.6 million to $ 20.9 million, an amount that Park Plaza said was the “actual and actual market value” of the property. The future of the litigation is unclear in light of the foreclosure lawsuit.
In the Little Rock area, three other mall properties changed hands, at reduced prices, before the pandemic.
Upscale Fairway Drive in west Little Rock changed hands for $ 10 in cash and other unspecified considerations “instead of foreclosure” in 2019, real estate documents maintained online say by the Pulaski County Clerk’s Office.
La Promenade opened in 2008 with a prize of $ 79 million. The county appraiser values the property at $ 38.4 million.
Shackleford Crossings, also west of Little Rock, sold in December 2019 for $ 10.5 million, a quarter of the price of $ 42 million when it was last sold in 2011.
And in January, a New York-based mall operator specializing in distressed properties acquired the Outlets of Little Rock for $ 10 million, a fraction of the $ 60 million value at which the office of the Pulaski County appraiser had appraised the 30-acre property near Interstate 30. / Interstate 430 interchange.
The buyer was Little Rock Outlets Realty Holding LLC, headed by Mehran Kohansieh, also known as Mike Kohan. He heads the Kohan Retail Investment Group, based in Great Neck, New York, and owns a portfolio of 36 shopping centers in the United States.
The seller was NED Little Rock LLC, a subsidiary of New England Development, a Boston-based company that developed Outlets of Little Rock. It has around 55 tenants, up from 75 shortly after it opened five years ago.
State malls are not immune to the harsh retail environment.
About 13 months before the Outlets acquisition, another limited liability company related to Kohan acquired Central Mall in Texarkana, Texas. The Bowie [County] Central Appraisal District values the property at $ 10.4 million, less than half of the $ 23.7 million the district said it was worth in 2017.
Another Great Neck, NY real estate investment firm, Mason Asset Management, acquired Central Mall in Fort Smith for $ 17 million, also in December 2019. The property changed hands almost 15 years earlier to 70, $ 5 million.
And the owner of the Turtle Creek mall in Jonesboro is in trouble, according to an industry publication. A limited liability company linked to Brookfield Properties purchased the mall for $ 88.7 million in 2013.
The Real Deal, an online real estate publication, reported in January that 10 Brookfield malls were at risk of being turned over to their lenders, based on an analysis of mortgage data and media reports. The properties are backed by a total of $ 1.2 billion in loans, according to the Real Deal.
The Turtle Creek Mall, which suffered significant damage from a tornado about a year ago, was not among the 10 malls listed.