A Plainfield shopping center is facing foreclosure for the second time in its short history, after its owner failed to sell off the mall prior to the pandemic or renegotiate the property’s loan terms after the health crisis began.
The Shops at Perry Crossing is owned by Memphis-based Poag Shopping Centers LLC, which bought the property originally known as Metropolis in 2014 with a $35 million loan through holding company Metropolis Lifestyle Center LLC. Chicago-based Blue Vista Capital Management LLC also was a partner in the acquisition.
Lender Pacific Western Bank filed a foreclosure suit against the holding company in June after it missed a May deadline to pay off the loan’s $30 million balance.
Poag Shopping Centers CEO Josh Poag told IBJ that the foreclosure could have been avoided if the company had been able to offload the 15-year-old lifestyle center before COVID-19 began affecting the investment market in March.
The 600,200-square-foot mall is the 10th largest in the Indianapolis area in terms of square footage.
“We put it up for sale starting last fall,” Poag said. “We were calling for offers in March, and obviously … that was at the beginning of the COVID crisis, so that derailed all our plans to sell the property.”
Before the Great Recession, Poag was best known for its development of new shopping centers, but now it typically buys properties and flips them for a profit after a few years.
“We look at properties that we can help grow and add our development touch to help them flourish,” he said. “That’s what we did with Perry Crossing. It finally got to the point where our partners came to us and said, ‘You know, we’ve done a great job, let’s go ahead and sell it and pass it on to the next partner.’ And we were looking [at doing that], but obviously it never came to fruition.”
The firm tried to work with Pacific Western to extend the maturity date on the loan, but “we couldn’t work out a deal,” Poag said.
After talks stalled, the bank moved forward with foreclosure process, filing its claim for the property in Hendricks County Superior Court 2 on June 4.
So far, foreclosure proceedings have not directly affected Perry Crossing, which itself has mostly recovered from the temporary but extensive store closures created by the pandemic. The shopping center is about 85% occupied and virtually all tenants have reopened, except for but AMC Theatres.
The shopping center, which underwent an $11.1 million renovation and rebranding in 2015, has gone into receivership previously.
In 2008, the property fell into court-appointed receivership after its owner and developer Premier Properties USA Inc. began suffering major losses and extensive legal troubles.
Premier, which spent $160 million to develop the mall, dissolved in 2009—the same year its founder, Christopher P. White, was sentenced to one-year on home detention and three years of probation for writing a bad $500,000 check while trying to save the struggling real estate development firm.
In 2010, two Israel-based firms took the shopping center under contract, with plans to pay $52 million, but the acquisition failed to go through.
The 68-acre property is undergoing some additional development since being acquired by Poag, with a Marriott-brand hotel now under construction and another hotel in the works. Both properties will be owned by Georgia-based Peachtree Hotel Group, which earlier this year bought the downtown Hampton Inn by Hilton for $33 million.
But the shopping center’s day-to-day management could eventually change as part of the foreclosure.
In its complaint, Pacific Western asked the court to appoint a receiver for the property, rather than keep it under Poag’s management. Among other responsibilities, a receiver would have the power to determine who is best to manage the property throughout its legal proceedings. The hearing is set for Aug. 20.
Poag said his company, which operates 16 other lifestyle centers throughout the United States, should be permitted to retain management at least until a buyer is found.
“We are the leading lifestyle center developer and manager in the country … so we can do this better than anybody,” he said. “I would think we would be the best choice to continue to manage the property going forward, but that may not be our choice.”
Attorneys for Pacific Western did not respond to request for comment late Tuesday.