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Sunday, Oct. 12, 2008

Macon Mall to be up for sale next month

The Macon Mall is set to be sold to the highest bidder next month due to nonpayment of a $141.2 million loan.

The forced sale by the holder of the loan will take place Nov. 4 at the Bibb County Courthouse, according to a legal advertisement. The foreclosure action began in July when a new management company was approved by the court to take control of the 1.4-million-square-foot mall, as reported by The Telegraph.

The sale is subject to certain leases, easements and taxes and the property "may be sold as an entirety or in separate parcels ... as (the) holder in its discretion may elect," according to the legal ad.

Attempts Saturday to reach lawyers representing the lender were unsuccessful.

In June 2005, New Jersey-based The Lightstone Group borrowed $141.2 million and Macon Mall LLC and Burlington Mall LLC in North Carolina were used as collateral for the loan, as well as rents and other income for the properties. The company purchased the two malls about the same time in 2005 for $166 million. A division of the company, The Prime Retail Group, took over management of Macon Mall.

The loan currently is held by LaSalle Bank National Association as trustee for a trust that holds and owns a pool of loans, including the one for Macon Mall. The trust filed a complaint July 11 against the Macon Mall and a similar complaint was filed against the Burlington Mall.

As of July 7, the loan's outstanding principal balance was $137.9 million and the total unpaid debt stood at more than $155 million, according to the complaint against Macon Mall.

Also in July the lender asked the court to appoint a receiver to manage the mall, and Chicago-based Jones Lang LaSalle Americas Inc. was appointed the management company for Macon Mall.

After negotiations between the mall owner and the lender, the mall agreed "it would not contest foreclosure of the properties," according to a statement in July from CW Capital Asset Management, the special servicer of the loan.

On Saturday, Brooke Houghton, spokeswoman for Jones Lang LaSalle, said the company is still the receiver and that "we will continue on with the management responsibilities for the center."

However, upon the sale of the property through foreclosure, Jones Lang LaSalle shall "be discharged and relieved from this order and this action shall thereupon be terminated," according to the court Order Appointing Receiver dated July 18.

Mall manager Brian Olivi said Saturday that he wasn't aware of the foreclosure legal notice and that he couldn't comment on what it might mean for the mall, but he "will further investigate the matter."

Also, it is unclear what effect the foreclosure of the mall will have on Dillard's, Belk, Sears and Macy's, which own their buildings, Olivi said.

JCPenny, the other anchor store, leases its space, he said.

Last week Dillard's announced it would be closing its store at Macon Mall by mid-December. The department store chain opened another store at The Shoppes at River Crossing off Riverside Drive in March.

In 2006, the Parisian store chain, which had a store at Macon Mall, was bought by Belk Inc., and a year later the 104,000-square-foot Parisian store closed at the mall.

For now, everything remains the same at the mall, Olivi said.

It appears from the legal notice that all leases will remain intact after the sale - except for one.

A lease with the Movie Tavern is not part of the sale, the legal ad states.

In January, Dallas, Texas-based Movie Tavern Partners LP announced plans to open a 35,000-square-foot theater in a portion of the former Parisian store.

The theater would feature stadium-style seating and serve food and alcohol.

At that time, it was expected to be open by April 2009, but no construction has begun.

Olivi said last week the theater company and mall management still were working on a deal but the business might not be located in the Parisian space.

"The ownership decided it wanted to take a look at other options and see if it makes sense," he said last week.

The situation with Macon Mall is happening at a time of a massive upheaval in the economy in general, and in particular with the shopping center industry.

Several department store chains have been consolidating during the past few years and any new stores built are smaller.

According to a report Oct. 8 by the International Council of Shopping Centers: A shakeup among shopping center owners might leave many chains dealing with new and unfamiliar landlords, said Jim Sullivan, a REIT analyst at Green Street Advisors, a California-based research and consulting firm.

To contact writer Linda S. Morris, call 744-4223.