Wells Fargo seeks to foreclose on Southland Mall in Cutler Bay

Miami /
Jun.June 09, 2020 02:30 PM
Southland Mall in Cutler Bay

Southland Mall in Cutler Bay

UPDATED, June 9, 3:20 p.m.: Even as malls reopened in South Florida, those that are struggling could wind up under new ownership in coming months.

Wells Fargo, representing a trust of commercial mortgage backed securities investors, filed a foreclosure lawsuit against the owner of Southland Mall in Cutler Bay, claiming the borrower is in default on its $65.1 million CMBS loan.

The lawsuit alleges that the borrower defaulted on its debt payments in April, and Wells Fargo is seeking to put the mall under receivership. The mall, at 20505 South Dixie Highway, is owned by the private equity firm Investcorp.

The lawsuit is the first to seek foreclosure on a South Florida mall since the coronavirus pandemic began in March. Retailers have been hit especially hard as a number of well known chains such as J.C. Penney and J.Crew have filed for bankruptcy.

Many retail properties are financed by commercial mortgage backed securities or CMBS loans. These loans can be especially problematic for borrowers since they are harder to restructure than a conventional mortgage when they run into trouble, and can only be restructured through a process known as special servicing.

Southland Mall’s $65.1 million CMBS loan went into special servicing in early April, after it said most of its retail tenants could not pay rent, according to Trepp.

Investcorp, initially asked its special servicer KeyBank for relief, but later said the property will be “unsustainable,” according to Trepp.

Investcorp declined to comment.

One of Southland Mall’s tenants is J.C. Penney. Its other large anchor tenants include TJ Maxx, Regal Cinemas and LA Fitness. Southland Mall, formerly known as Cutler Ridge Mall, opened in 1960. It was renovated in 2005.

The mall has had trouble with its loan in the past. In 2018, its $67.5 million loan was transferred to special servicing and the borrower extended the maturity date until May 2019. Two of the mall’s large tenants have left in the past few years: K-Mart in 2017 and Sears earlier this year. The loan now has a balance of $65.1 million.

Malls and stores in Miami-Dade County began to reopen on May 18 as part of the county’s phase 1 reopening.


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