Wells Fargo says mismanagement by Southland Mall owner contributed to downfall
The bank, which filed a foreclosure suit earlier this month, says an entity-tied to mall owner Investcorp racked up code violations and citations
As it moves ahead with its foreclosure lawsuit against the owner of Southland Mall, Wells Fargo is now alleging the company had for years been mismanaging the struggling retail center in Cutler Bay.
In a recent filing related to the foreclosure suit, the bank says the owner owes over $160,000 in code violations and citations to Cutler Bay and Miami-Dade County. The mall is owned by private equity firm Investcorp.
Wells Fargo, representing a trust of investors, filed its foreclosure suit earlier this month against Southland Mall Properties — an entity tied to Investcorp. The suit was filed after Investcorp failed to make its April payment on a $65.1 million CMBS loan from JPMorgan Chase.
In its most recent filing, the bank alleges Investcorp’s mismanagement contributed to that loan default, and told the court it would appoint Carmen Spinoso as receiver of the property. Spinoso is CEO of Syracuse, New York-based Spinoso Real Estate Group.
Wells Fargo has said the property has five different code violations totaling $66,189, which have not been paid. In addition, there are open citations on the property totaling $94,360. The $160,550 total will be secured by liens against the property if they are not paid, according to the bank’s recent filing.
“The borrower has had years to remedy these situations but has failed to do so,” according to the motion.
A spokesperson for Investcorp declined to comment on the lawsuit or allegation of mismanagement. A lawyer for Southland Mall Properties did not immediately return a request for comment.
The lawsuit is the first to seek foreclosure on a South Florida mall since the coronavirus pandemic took hold in March. Retailers have been hit especially hard as a number of chains such as J.C. Penney and J.Crew have filed for bankruptcy because of the impact.
Southland Mall’s debt 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.
One of Southland Mall’s tenants is J.C. Penney. Its other large anchor tenants include T.J. Maxx, Regal Cinemas and LA Fitness. Southland Mall, formerly known as Cutler Ridge Mall, opened in 1960 and was renovated in 2005.
The mall has had trouble with its loan in the past. In 2018, its then $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.