Lender to take over two Tampa Bay Westfield malls after loan defaults
The Countryside mall in Clearwater and Citrus Park mall in Tampa defaulted on loan payments of $278 million combined.
By Sara DiNatale
Published Dec. 31, 2020
Updated Dec. 31, 2020
Two of Tampa Bay’s largest suburban malls are facing foreclosure and are slated to be taken over by their lender after both defaulted on multi-million-dollar loans.
The mortgage lender to both the Westfield Citrus Park and Countryside malls filed lawsuits on Tuesday, saying they had failed to make principal payments since May. The malls defaulted on commercial mortgage-backed security loans, creating a combined debt owed of nearly $278 million.
“Due to the continuing impact of the COVID pandemic, Westfield is working with the special servicer in regard to the foreclosure of Countryside and Citrus Park and, given the circumstances, believe this is the best outcome with regard to these two assets,” Westfield said in a statement. “We are committed to ensuring a smooth transition to new ownership, with both centers remaining open and operating throughout the process to serve the community.”
The lawsuits are the latest example of how suburban malls, especially, continue to struggle to stay afloat during shifting consumer trends and the COVID-19 pandemic.
As of November, Citrus Park in Tampa owed nearly $128 million to its lenders and Countryside in Clearwater nearly $150 million. Both malls had loans issued by Morgan Stanley Mortgage Capital Holdings.
The lender said in the lawsuits it was seeking to take over the malls’ titles and have rent payments turned over.
Megan Murray, a Tampa bankruptcy attorney, said this sort of strategy to dealing with debt if often called “giving back the keys.” Although the lawsuits don’t lay out exactly Westfield’s current financial situation, it’s likely the mall wasn’t making payments because its retail tenants are struggling to make rent.
“It’s a tough situation because (lenders) are still owed the mortgage payments but their owners are waiting for the rent to come in,” Murray said. “The pain is running up hill.”
Unibail-Rodamco-Westfield, a European commercial real estate company, owns the Citrus Park and Countryside properties. The real estate firm also owns the Westfield Brandon mall, which, as of Thursday, had no foreclosure lawsuits filed against it in Hillsborough County.
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The lawsuits were filed in Hillsborough County and Pinellas County circuit courts, respective of each property’s location.
When the pandemic began, lenders were willing to allow some concessions and deferrals to malls struggling across the country. The hope was those payments would resume once the initial lockdowns passed, but that hasn’t happened.
Activist investors of Paris-based Unibail-Rodamco-Westfield, which acquired Westfield in 2018, started suggesting the company sell off its U.S. portfolio in the fall to limit further financial pain.
The Citrus Park mall is home to a Regal movie theater, which like all Regal locations, stopped operations in October. The mall’s Sears store closed in 2018, leaving a 128,000-square-foot vacancy. The board of county commissioners in Hillsborough recently approved a land-use change so the former Sears could become a bowling, arcade and family entertainment center.
At Countryside, part of its former Sears has already been turned into a Whole Foods. The mall also has a CMX Cinema. Both malls are anchored by Dillard’s, Macy’s and JC Penney, all of which have struggled to make up for losses caused by the pandemic.
Murray said it’s hard to predict whether the new owners will try to redevelop the properties or sell them off quickly to recoup what they can. The vaccine rollout has left some retailers optimistic shopping centers could return to pre-COVID visitor rates in the new year.
“The world might look a lot different in six months,” Murray said.
