Commercial Real Estate Direct Staff Report
General Growth Properties Inc. is in the market to sell a financially-struggling regional mall with 1.1 million square feet in the Orlando, Fla., area.
Rockwood Real Estate Advisors has been tapped to market the property, the West Oaks Mall, which sits on 78 acres at 99401 West Colonial Drive in Ocoee, Fla., about eight miles from downtown Orlando. It will use the Auction.com platform to offer the property from Oct. 9-11.
The property's expected to sell for substantially less than the $64.8 million of debt that encumbers it. That debt, backed by the mall's 268,188 sf of inline space, is securitized through Wachovia Bank Commercial Mortgage Trust, 2003-C9. The debt has a 5.25 percent coupon and matures next August.
The debt is being handled by the CMBS trust's special servicer, CWCapital Asset Management, an affiliate of Rockwood. No payment has been made on it since May, according to servicer data compiled by Morningstar Credit Ratings.
GGP, a Chicago REIT, holds title to the property, but has agreed to surrender it to the trust in lieu of foreclosure.
The offering includes all of the inline store space; two anchor tenant spots with 368,720 sf; 61,847 sf of outparcel space; and three development parcels with nine acres on the mall's periphery. The anchor spots include a 223,813-sf store that is vacant and 144,907 sf occupied by a Sears's store.
The Sears store was among 11 that Sears sold to GGP earlier this year because it had been planning to vacate the locations. But it's not certain whether the retailer will vacate the West Oaks Mall.
The offering does not include the mall's other anchor spots, a 195,075-sf store occupied by Dillard's and 95,994 sf occupied by JCPenney.
The inline space is about 70 percent occupied, but several tenants are on very short-term leases. Its occupancy level, which was 96.4 percent when the loan was issued, nosedived after the national economy plummeted in 2008 and hasn't recovered.
In addition to the loss of many smaller inline tenants, the property also lost tenants that had occupied its outparcels. Those include Border's Books, which filed for bankruptcy in 2010, Chevy's restaurant and Toys R Us.
GGP, in a joint venture with the New York State Common Retirement Fund, had developed the mall in 1996. In 2007, it bought out the pension fund's stake in the venture, known as GGP/Homart I, which was also invested in 21 other malls.
Morningstar has speculated that West Oaks Mall could be sold for about $35.6 million, which would result in a loss of $27 million to $28 million to the CMBS trust. However, people familiar with the property believe it would struggle to fetch as much as $20 million.
Rockwood, of New York, is pitching the offering as a value-add opportunity. The property's marketing material notes that two anchor posts being offered are contiguous, which would give a new owner latitude in reconfiguring the space to meet the needs of prospective tenants.
The mall's inline tenants include Victoria's Secret, Bath & Body Works, Finish Line, Hollister and Champs, along with a 14-screen AMC theater that generates more than $313,000/screen in annual sales.
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