By STEVE SOUTHWELL
The owner of Vista Ridge Mall had a $64.6 million balloon payment due in April for the balance of the loan they used to purchase the mall after its previous owner’s bankruptcy in 2009.
Rouse Properties, Inc. and its lender have agreed to put the mall in receivership, after Rouse missed the payment.
Receivership usually involves a the borrower giving back possession of the property so that a creditor can sell it to satisfy a debt.
The loan for Vista Ridge had been in special servicing since last February. News stories last spring noted that a foreclosure was possible.
A press release from Rouse dated May 2, said that on April 5, the loan for Vista Ridge Mall matured and was not repaid. The Company was notified by the lender of the default on April 19.
The release stated, “The Company is working vigorously with the lender to convey the property in full satisfaction of the debt.”
Fred Meno, president and CEO of asset services for The Woodmont Company said Monday that he and his firm had taken over management, operations, leasing, and marketing of the mall as of last Friday.
“The first step in the process from a timing standpoint was to appoint a receiver, and that’s me,” said Meno.
“The mall is going to stay open – open for business, looking to increase occupancy. The project is a staple, a landmark in the Dallas Fort Worth mall landscape and has all the anchors in place.”
Meno was positive about the viability of the mall’s continued operations. “We take over a lot of distressed malls, and I really don’t consider this one to be distressed,” he said. “I see it as one that’s got significant upside.”
“Cinemark does very well here— Sears went through a list of closing announcements nationwide and Vista Ridge was not on that list. [JC] Penney’s has gone through store closings in prior years as well, but remains here as well. Dillards does fairly well here. All the fundamentals are here.”
Refinancing might be a logical next step for the owners, but Meno explained that it was out of the question.
“Real estate values 10 years ago when the loan was made were much higher nationwide than they are now,” he said. “But because of that downdraft that has occurred with real estate valuations, it has made it difficult for borrowers to refinance debt as it has been maturing. That’s the situation here.”
Although Rouse’s Dec. 31 balance sheet showed $65.4 million in debt on the mall, it carried a value of only $62.4 million— $3 million in negative equity.
The mall ownership has not changed as of the moment.
Meno said Monday that the ownership was still with the borrower, a company that had been created to own the mall. But, he implied that it would likely change in the near future to go back to the lender through foreclosure or deed-in-lieu of foreclosure.
Or not. “The receivership could go on for some period of time without a title change back to the lender,” he said. “That’s not something I’m involved with as the receiver.”
Records filed with the Denton County Clerk show that Delaware-based Vista Ridge Joint Venture, L.P. is the debtor, and US Bank, NA is the trustee for holders of the LB-UBS Commercial Mortgage Trust certificates.
The mall has over a million square feet of leasable space, and recent visitors might say that too much of it is empty. But as of December 31, 2015, according to documents filed with the SEC, the mall was 83.2 percent occupied.
“We are going to be aggressively trying to lease the property,” said Meno.