Mall at Partridge Creek faces receivership
The Mall at Partridge Creek is Metro Detroit's second mall in the past year to face receivership after its owner defaulted on its mortgage even before the COVID-19 pandemic.
Florida-based Starwood Capital Partners defaulted in November 2019 on the $725 million loan that includes the 14-year-old open-air Clinton Township shopping center and three other mall properties in other states, according to commercial real estate research firm Trepp LLC. Now, someone else could be appointed to oversee each site as has happened with Fairlane Town Center in Dearborn.
"Discussions with (borrower) have not resulted in an acceptable resolution strategy," reads a loan commentary posted this month on CoStar Group Inc., a real estate information service. "Therefore (special servicer) has entered into discussions with a receiver and plans to move forward with legal proceedings in each jurisdiction to have the receiver appointed at each property."
Partridge Creek had lost two major anchors — department stores Carson's in 2018 and Nordstroms in 2019 — even before the pandemic had turbocharged changing retail trends. Other tenants since have followed. Stay-at-home orders and fears of infection fomented an explosion in online shopping and pushed corporate retailers to accelerate exits from bricks-and-mortar spaces.
Starwood did not immediately respond to request for comment. It hadn't made an interest payment in the last six months of 2020 for Partridge Creek and the three other malls in Florida, Virgina and North Carolina, according to Trepp.
An appraisal at the end of March 2020 placed the four properties' value at $366.7 million — about half of the original $725 million loan, according to the loan commentary. The balance is now $681.6 million.
The $155 million mall with 400,00 square feet of space opened to much fanfare in 2007. For a time, its parking lots were full of shoppers visiting the 90 stores and restaurants, including anchor Parisian, later rebranded as Carson’s. The upscale Nordstrom opened a two-level store on the other side of the mall shortly thereafter.
In 2014, the mall’s developer, Bloomfield Hills-based Taubman Centers Inc., sold the property to Starwood in a package deal that effectively unloaded seven properties for $1.4 billion at the peak of the market.
The other three malls experienced similar major losses as Partridge Creek. Tenancy across Starwood Capital's four properties dropped to 76% in 2020 from 96% in 2016, according to Trepp. That's higher than the 10.5% average in the fourth quarter of last year, according to Moody’s Analytics REIS.
Fairlane in Dearborn entered receivership last year after its $161 million loan transferred to special servicing last March. The receiver is "working with the lender to determine the right timing to sell each of the assets," according to loan commentary for the 1976-built mall. The mall would be first to sell, while "the other two properties have activity that needs to be completed to help drive the value of each asset."
Staff writer Candice Williams contributed.