A lender took control of the Southland Mall in Cutler Bay after a foreclosure auction failed to result in any bids over $ 2,600.
Lack of interest in the once bustling mall formerly owned by private equity firm Investcorp could indicate how bad things have turned out for suburban Class B malls in South Florida and across the country.
Wells Fargo, representing a trust of commercial mortgage-backed securities investors, received a $ 68.7 million foreclosure judgment in January, which included the loan principal plus interest and fees, according to the filing .
The judge ordered the sale of the 990,000 square foot indoor mall at 20505 South Dixie Highway in a foreclosure auction on February 10. $ 2,600. No other investor sought to pay more and the lender was able to foreclose on the property, according to documents.
Investcorp declined to comment through a spokesperson. A lawyer representing Wells Fargo in the lawsuit did not return a request for comment.
the South Florida Business Journal first reported the news of the judgment and the auction.
Investcorp defaulted on its $ 65 million CMBS loan in April and initially sought relief from its special manager KeyBank. But later the company said the property would be “Unsustainable”, according to Trepp. A foreclosure action was filed in June and a mall receiver was appointed this summer.
In October, commercial brokerage JLL was approached to sell the CMBS $ 65.1 million loan attached to the mall. The marketing pitch mentioned the designation of the opportunity area and the potential for redevelopment of the shopping center.
Now, the lender’s plans for the mall are unclear.
The redevelopment of shopping centers has proven to be a difficult task, even for the largest shopping center owners in the country like Simon Property Group and Brookfield Real Estate Partners. Part of the challenge is buying out key tenants, who own their spaces. Another obstacle may be obtaining the necessary zoning approvals from municipal and government authorities.
Southland Mall had financial problems before the coronavirus pandemic. One of its largest key tenants, Kmart, left in 2017. A year later, his loan was transferred to special maintenance due to the retail vacancy, and its expiration date has been extended. Last year, the mall suffered another heavy blow when Sears left its store.
Its remaining tenants include JCPenney, TJ Maxx, Regal Cinemas, and LA Fitness. At the end of 2020, the occupancy rate was only 74%, according to Trepp.
Renter vacations had a huge impact on the mall’s appraised value, according to Trepp. Its valuation rose from $ 130 million in 2014 to $ 68.4 million in June.