Landmark Building in West Palm Beach Falling Prey to Foreclosure

The Palm Beach Mall – a landmark building in West Palm Beach is falling prey to foreclosure. It was the first shopping mall (indoor) of its kind. This will end the story of this 42 year old complex as just another piece of foreclosure on steps of the courthouse.

The lenders are suing the mall for defaulting on a loan of $55.4 million. The legal suit was filed on 14th April 2009 in the circuit court of the county.

Once the mall had been bustling with activity but recently it has become eerie and vacant as the owner (Simon Property Group of Indianapolis) evicted tenants hoping to redevelop the joint in a grand way. One of the participants of this grandiose scheme was Swedish firm, Ikea. But when the recession set in, all plans evaporated.

Wells Fargo Bank brought the foreclosure suit acting as trustee for JPMorgan mortgages. These mortgages are serviced by ORIX Capital Markets. The loan had been taken in 2002.

The foreclosure seeks to sell the property to clear the mortgage dues. It is not sure whether this will mean the final end of the mall. It is common knowledge that Simon, who is the largest mall owner in the country, has plenty of cash plus equity and savings. It has been disturbing many real estate analysts as to why Simon did not clear dues and is willing to forfeit its property. Simon was not available for comment.

Mohammed Tina is one of the few who had struggled to save his clothing outlet in the mall. He thinks Simon is playing a smart game and allowing this foreclosure so as to force loan restructuring. The irony is that banks are willing to talk about negotiation only when the borrowers start to default. The mall is now all but empty and this means its property value has dropped. As a result the lease that Mohammed had signed is not worth anything now.

Simon has other malls in Palm Beach County including Town Center, Boca Raton and Boynton Beach malls. The foreclosure suit does not include these units.

Just prior to this foreclosure suit a bankruptcy protection (Chapter 11) was filed by General Growth Properties of Chicago – the second largest mall owner in USA. It could not make its lenders agree to give it more time to refinance the dues.

While the giants battle the grass grows on vacant complexes as Mother Nature reclaims what was once hers.