While Palm Beach’s CityPlace has seen high retail occupancy and bustling traffic, the high-profile downtown shopping complex has not been immune to the challenging economic climate. A lender from Miami Beach filed a foreclosure suit Thursday in Palm Beach County Circuit Court.
In spite of relatively high occupancy rates, CityPlace is facing a foreclosure lawsuit brought on by an entity affiliated with LNR Partners of Miami Beach. According to records, CityPlace fell behind on its $150 million loan in March.
CityPlace Partners issued a statement about the lawsuit, noting, “CityPlace Partners continues to work closely with the special servicer to realign the loan and ensure the continued long-term success of CityPlace. Those talks are ongoing.”
Experts in real estate have said that it remains unknown whether the lender will attempt to take back the property. Tom Prakas, a restaurant broker who has negotiated a number of leases at CityPlace said, “I would think they’re going to try to work it out.”
According to the foreclosure documents, CityPlace Retail LLC is an affiliate of New York-based Related Cos., which is led by Miami Dolphins owner Stephen Ross.
In 2011, CityPlace’s retail occupancy was at 93% and tenants include Macy’s department store, Barnes and Noble Booksellers and Muvico Theaters. A recent appraisal of CityPlace listed its worth at $143 million – significantly down from a “boom-time value” of $233 million. The shopping complex’s net operating income has also fallen over the years from $9.3 million in 2006 to 45.2 million in 2009. Despite it’s high traffic and good occupancy rate, it is reported that many tenants pay very little rent to occupy space at CityPlace; this makes the center appear vibrant, but it doesn’t add much revenue to CityPlace coffers.
City spokesman, Chase Scott, said CityPlace has not missed any payments and it was built on land leased from the city of West Palm Beach and he expects that CityPlace will survive the financial turmoil.
Joseph Schober, president of the CityPlace Tower Condominium Association noted that CityPlace isn’t going to go away, adding, “It’s a very viable place.” He believes the lack of a convention center hotel has possibly robbed the center “of much-needed traffic.”
Source: Palm Beach Post
Photo: Concierge Florida