Wells Fargo bank has filed a complaint seeking control of the Upper Valley Mall this week, citing concerns it won’t be to pay off the remaining $47 million of a loan.
In the complaint, filed in Clark County Common Pleas Court, attorneys representing Wells Fargo argue a receiver should be appointed to collect rents from the mall after a recent default. Unless a receiver is appointed, the complaint argues, “tenants will continue to leave the premises,” and “the premises will deteriorate.”
The complaint asks the court to appoint a receiver to manage and control the mall’s assets and collect rents.
The health of the Upper Valley Mall is essential to Clark County, said John Detrick, a Clark County commissioner.
“The mall is a major sales tax draw. (It’s) probably our biggest, single source of sales tax revenue,” Detrick said.
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Officials at the mall declined to comment Friday afternoon and officials at Simon Malls, which operates the property, couldn’t be reached for comment. Attorneys representing the bank declined to comment Friday.
The complaint doesn’t include Macy’s and Sears, two of the mall’s anchors that own their space. It includes about 738,000 square feet of space on about 73 acres of property at 1475 Upper Valley Pike.
In most cases, a receiver is appointed to get the most value possible for a property for the lender, said Dan Harkins, a local attorney who reviewed the case Friday.
“A receiver is like a trustee,” he said. “What they’re trying to do is get someone to come in and remove current management for the purposes of trying to turn the mall around. Because if they go straight to a foreclosure, they may not get their entire loan value.”
The complaint alleges Bank of America entered an agreement in 2004 to loan the mall about $48 million. Court documents show the most recent balance due on May 20 was about $47 million. Wells Fargo eventually took over the loan.
In most cases, a receiver is sought not to manage a property long-term, but to dispose of it for the best possible value for the lender, said Howard Davidowitz, of Davidowitz and Associates, a retail consulting firm in New York.
“That’s very typical because middle malls all over the Unites States are going broke,” he said. “The lenders like Wells Fargo are typically stuck with the debt.”
Many malls across the U.S. have high vacancy rates as retailers and specialty stores have closed stores in recent years, Davidowitz said.
Court documents indicate the mall is unable to meet its financial obligations.
“Upper Valley Mall has made certain statements … that have led plaintiff to conclude unequivocally that the loan will not be repaid on or before its maturity date of July 1, 2014, and that an option to extend the maturity date will not be exercised,” the complaint says.
The mall has faced challenges in recent years but also seen new tenants.
Elder-Beerman, one of the mall’s anchors for about 20 years, closed its store. The mall declined to discuss its vacancy rates, but several storefronts at the mall were empty this week.
A handful of businesses have announced recent agreements at the mall, including Fent’s Dairy, Subway, and Sonie’s School of Dance, Gymnastics and Cheerleading. The Boonshoft Museum of Discovery also opened a satellite location at the mall last year where it offers an interactive science center.
Shoppers were surprised by the news Friday afternoon.
Springfield resident Sandra Kerby has been coming to the mall for years. She’s seen the ups-and-downs with stores coming and going over time, she said.
If she needs something, the mall is always there, although she said she prefers to shop in Beavercreek. She often brings her grandchildren to visit Santa Claus during the Christmas season.
“I’d hate to see it go,” Kerby said.
Regardless of the mall’s management, improvements need to be made, said Springfield resident Monique Timmons. She doesn’t shop at the mall very much, opting to travel elsewhere.
Shopping malls nationwide are hurting because more people are shopping online, Detrick said.
“We’re going through a change in buying habits from the retail level and as a result traditional retailers are (struggling),” he said.
Detrick noted that Columbus-based Glimcher Realty Trust has put 13 of its properties up for sale, including the Dayton Mall and Fairfield Commons. The concepts that have seen success are the outdoor shopping and entertainment complexes, he said, such as The Greene Town Center in Beavercreek.
A quick resale of the property would be better in the long term than a situation in which the court-appointed receiver manages the property for a long time, Harkins said.
“What this action confirms is speculation that the mall is no longer viable and that without a significant intervention either through the courts or economically through a distressed sale, the mall is not able to fulfill its financial obligations,” Harkins said.
Staff writers Michael Cooper and Tiffany Y. Latta contributed to this report.