CityPlace sued for foreclosure by lender
By Pankaj Ladhar of Manos • Alwine P.L.
A West Palm Beach shopping center known as CityPlace is reportedly being sued by its lender for late payments on a $150 million loan. According to lenders, the commercial dispute stems from a refusal to settle on past due payments on the loan, despite a reported $233 million appraisal of the property. According to the owners of CityPlace, however, net operating income has declined to $5.2 million, from $9.3 million in 2006. This comes as a shock to many analysts that have found the property’s traffic to have risen by 7 percent over the past two years.
As for the current tenants of CityPlace, the future is unclear. While a foreclosure can mean lower rental rates after an adjusted property appraisal, it can also increase monthly rent for store owners, and prevent new stores from opening in the complex.
But business experts are pointing to the foreclosure lawsuit as a sign that negotiations to settle the debt are going far from well, claiming that such lawsuits are typically a way for lenders to apply more pressure to borrowers in order to finalize a deal.
Real estate brokers are also claiming that the rent that many tenants have paid in the past has been remarkably low, if paid at all. According to financial experts analyzing the foreclosure, the practice of allowing new tenants to run their businesses rent-free within the complex helps encourage growth and stability, as well as help tenants pay overhead costs like insurance and taxes, with can be more than $27 per square foot, but it could be a major reason why CityPlace has fallen behind on debt repayment.
Source: The Palm Beach Post “Can CityPlace survive hard times? Food, entertainment, retail in limbo,” Alexandra Clough, Oct. 3, 2011