Lender takes control of struggling Southland Mall in Cutler Bay

Wells Fargo, representing CMBS investors, made a “credit bid” of just $2,600

Southland Mall in Cutler Bay (Google Maps)
Southland Mall in Cutler Bay (Google Maps)

A lender has taken control of Southland Mall in Cutler Bay after a foreclosure auction failed to yield any bids over $2,600.

The lack of interest in the once bustling mall previously owned by private equity firm Investcorp could signal just how bad things have gotten for Class B suburban malls in South Florida and across the country.

Wells Fargo, representing a trust of commercial mortgage-backed securities investors, was awarded a foreclosure judgment of $68.7 million in January, which included the loan’s principal plus interest and fees, according to the filing.

The judge ordered the 990,000-square-foot indoor mall at 20505 South Dixie Highway to be sold in a foreclosure auction on Feb. 10. Wells Fargo, representing the CMBS investors, placed a credit bid, or a bid using its existing debt, of $2,600. No other investor sought to pay more, and the lender was able to seize the property, documents show.

Investcorp declined to comment through a spokesperson. An attorney representing Wells Fargo in the suit did not return a request for comment.

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Jamie Dimon of JPMorgan, Southland Mall and Investcorp co-CEOs Rishi Kapoor (top) and Hazem Ben-Gacem (Credit: Getty; Southland; Investcorp)
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Investcorp wants out of struggling Southland Mall
Investcorp CEO Hazem Ben-Gacem and Southland Mall (Credit: Google Maps)
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Southland Mall, 20505 South Dixie Highway in Cutler Bay with JLL's Tom Hall and Danny Finkle (Google Maps, JLL)
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Southland Mall’s troubled $65M CMBS loan for sale

The South Florida Business Journal first reported the news of the judgment and the auction.

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Investcorp had defaulted on its $65 million CMBS loan in April and initially asked its special servicer KeyBank for relief. But later the firm said the property will be “unsustainable,” according to Trepp. A foreclosure suit was filed in June and a receiver for the mall was appointed in the summer.

In October, the commercial brokerage JLL was tapped to sell the $65.1 million CMBS loan tied to the mall. The marketing pitch cited the mall’s Opportunity Zone designation and redevelopment potential.

Now the lender’s plans for the mall are unclear.

Redeveloping malls has proven to be a difficult task even for the largest mall owners in the country like Simon Property Group and Brookfield Property Partners. Part of the challenge is buying out anchor tenants, which own their spaces. Another roadblock can be scoring the necessary zoning approvals from city and government officials.

Southland Mall had financial issues prior to the coronavirus pandemic. One of its largest anchor tenants, Kmart, left in 2017. A year later its loan was transferred to special servicing due to the retail vacancy, and its maturity date was extended. Last year, the mall was dealt another blow when Sears vacated its store.

Its remaining tenants include JCPenney, TJ Maxx, Regal Cinemas and LA Fitness. At the end of 2020, occupancy was just 74 percent, according to Trepp.

Tenant vacancies have had a sizable impact on the mall’s appraised value, according to Trepp. Its appraisal fell from $130 million in 2014 to $68.4 million in June.