Staying with the story
The Springfield News-Sun provides the best coverage of the local economy and the impact the Upper Valley Mall has on it. The paper will continue to talk to experts and explain the legal dispute unfolding at the mall.
By the numbers:
$47 million — Amount remaining on a loan for the Upper Valley Mall
738,000 — Square feet of space in the Upper Valley Mall, not including the property owned by Sears and Macy’s
73 — Acres on mall property
A Chicago-based retail firm will take over management of Springfield’s Upper Valley Mall after the decades-old shopping center defaulted on a $47 million loan.
Urban Retail Properties, LLC., a firm specializing in regional malls, has taken over management of the property from Simon Management Associates, LLC, its previous management group. The mall opened in 1971 and local officials have said the shopping center plays an important role in the region’s economy.
Despite the legal dispute, experts have said the mall is not likely to close and that its struggles are not unusual.
The mall is an important asset both to residents and the county, and is one of the largest sources of sales tax revenue, said John Detrick, Clark County Commissioner. The management change, although likely temporary, is a hopeful sign for the mall, he said. Local officials had asked Simon over the years to invest more in updating the mall, but with little results, Detrick said.
“They were milking the cow and not putting any grass in the front end,” Detrick said of Simon.
A report from Green Street Advisors, a real estate firm based in California, showed the mall’s recent struggles are not unusual. While shopping centers in high-income areas are thriving, others have struggled to recover after the Great Recession as consumers have curbed spending on items like clothes and entertainment.
The appointment of a receiver will begin a potentially lengthy process in which Urban Retail will try to improve the value of the mall while Wells Fargo solicits potential buyers for the property, said Howard Davidowitz, of Davidowitz and Associates, a retail consulting firm in New York. Macy’s and Sears own their locations in the Upper Valley Mall and aren’t included in the legal dispute.
Wells Fargo will likely try to find a buyer quickly to get the most potential value, Davidowitz said.
“There is a lot of wisdom in trying to come together and come to a conclusion quickly,” Davidowitz said. “As time goes by, the value of this asset will dissipate, and that won’t help anybody.”
Simon Management did not contest the appointment of a receiver. Company officials declined to comment, saying only that management has been turned over to Urban Retail.
Staff from Urban Retail did not return a call seeking comment. But staff from that firm recently visited the mall and are developing a plan to turn around the mall’s financial situation, said Brenda LaBonte, general manager of the Upper Valley Mall.
“We’re very excited about working with Urban Retail Development,” LaBonte said. “Their corporate teams, including marketing, leasing and operations, have all visited the mall and are in the midst of a fact-finding process.”
Wells Fargo filed a complaint in late June, alleging the mall is unable to pay off about $47 million of a loan and asking the court to appoint a receiver to take over management of the shopping center. That request was approved in Clark County Common Pleas Court, and Krista Freitag, of E3 Advisors, was appointed as the receiver. Freitag selected Urban Retail to manage the property, but she did not return a call seeking comment Thursday.
Urban Retail is a real estate management firm that specializes in regional malls and community centers, according to its website. Along with the Upper Valley Mall, it also operates similar properties in 12 other states, including Michigan, Kansas and Iowa. The company manages more than 80 properties in 29 states overall.
The appointment of a receiver is an early step in the case, said Vincent Mauer, a Cincinnati attorney who is handling the case for Wells Fargo. The ultimate goal is to get as much of the the loan as possible repaid to Wells Fargo by selling the property, he said. The lawsuit is unlikely to affect the rights of tenants at the mall, although they will likely have a new landlord at the end of the case, he said. Their rent and lease would remain the same.
“Impact on the tenants is typically minimal in these scenarios,” Mauer said.
It’s not clear how long that process will take, but it could take several months to find a buyer who sees potential value in the site, Mauer said. In the meantime, Urban Retail will manage the day-to-day activities at the mall.
If no buyer is found, the mall property could be sold at a sheriff’s sale, although Mauer said that is unlikely.
“That is not happening today, tomorrow or the next day,” Mauer said. “My recollection is we get at least a year, so no sheriff sale is imminent here.”
If no buyer is found at that point, a private auction could be organized or the property could be reappraised and offered at a second sheriff’s sale with a reduced minimum bid.
More likely, all parties will involved will try to resolve the case quickly to maximize the value of the mall, Davidowitz said.
“Every day that goes by it’s further devalued,” Davidowitz said. “That’s not in anybody’s interest.”
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