Florida mall owners avoid foreclosure, get time to redevelop property
Negotiations went to the brink of a foreclosure trial for a Bradenton, Fla., mall, before a settlement was reached between the owners and the lender.
The two sides announced that the DeSoto Square mall's owners had agreed to pay $1.5 million to the lender within 90 days and another $3 million no later than June 1, with the money going to pay down interest.
If a total of $4.5 million is not paid as agreed, the foreclosure sale would be held June 3. If the $4.5 million is paid according to schedule, the foreclosure sale would be set for Sept. 30.
But attorney Ron Gache, representing the mall owners, said his client intends to payoff the entire debt, totaling $29.35 million, before then and proceed with redevelopment of the mall property near the intersection of U.S. 41 and 301 Boulevard.
"We have the ability to go out approximately 240 days from today, during which the borrowers believe they will be able to secure their financing, be able to work with the county to get their final approvals in place, and to get this project completed," Gache said.
Redevelopment will be 'very successful,' lawyer says
"The borrowers and developers have every intention of completing this project and they believe it can be very successful," he said.
Gache was referring to a redevelopment plan filed with Manatee County government in November.
The redevelopment, envisioned to happen over a 10-year period, would include demolishing most of the existing buildings, and replacing them with 128,514 square-feet of retail-lifestyle space, a 40,000 square-foot grocery, 90,000-square-feet of office space and three retail outparcels, totaling 16,250-square feet.
Also planned: Almost 900 residences of varying types.
Not included in those plans are the former Sears store area, where MGC Bradenton Sears LLC plans a ministorage facility, and the Hungry Howie's Pizza building and parking lot.
The mall owners' redevelopement plans have not advanced to to the review or approval stage with the Manatee County government.
The settlement comes nearly three years after the owners bought DeSoto Square mall.
Their lender, Romspen U.S. Master Mortgage LP, a Cayman Islands limited partnership, would be the recipient of the proceeds if there has to be a foreclosure sale.
A half day had been set aside for the foreclosure trial, which was set to begin at 1:30 p.m on Jan. 30.
But minutes before the trial was to start, Gache asked for more time to continue negotiations outside the courtroom with Murray Silverstein, attorney for Romspen.
About 30 minutes later, Silverstein came back into the courtroom, and said, "We've resolved it."
After entering the final judgment in the settlement, Circuit Court Judge Charles Sniffen expressed satisfaction at the outcome.
"Congratulations everybody. I am sure this was a protracted conversation to bring this about," Sniffen said.
DeSoto Square mall owes more than $29 million
The owners of the mall purchased the property in April 2017 for $22.85 millioon and still owe $21.79 million according to the foreclosure suit filed by Rompsen in 2018.
On top of the $21.7 million in principal that the Romspen is due, mall owners also agreed to pay $6.9 million in interest, $148,268 in attorney's fees, $33,280 in costs, $316,986.91 in third party costs, plus other costs, bringing the total owned to $29.3 million.
Named in the foreclosure suit are DeSoto Owners LLC, ML Estate Holdings LLC, Meyer Lebovits, UK Palms LLC, and others.
In a press release at the time of purchase in 2017, New York-based Meyer Lebovitz said $7 million would be invested into the mall at 303 301 Blvd. W., to make it a more attractive place to visit.
"The location of the DeSoto Square mall within the local community it has served for so many years makes our redevelopment purpose very clear: Make an exciting destination for its surrounding residents to shop, dine and enjoy entertainment," Lebovitz said in the release. "We will be adding new retail stores with canopied entries and new free-standing restaurants."
But over time, those improvements failed to materialize and the mall has suffered major tenant losses.