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Mall placed in receivership

January 12, 2009|By MATTHEW UMSTEAD

MARTINSBURG, W.Va. -- The Martinsburg Mall has been placed in receivership of a Chicago-based corporation after the company that owns it apparently defaulted on debt payments last fall, according to records filed in Berkeley County Circuit Clerk Virginia M. Sine's office.

Jones Lang LaSalle Inc. was appointed to serve as the retail center's primary leasing and managing agent by 23rd Judicial Circuit Judge Christopher C. Wilkes, according to an order filed Thursday morning.

"It appears to the court that defendant Martinsburg Mall LLC has defaulted in its financial obligations secured by the deed of trust, and is not in a position to manage the property and perform the required maintenance and other functions necessary to comply with the leases with tenants," according to the order Wilkes signed.

A complaint filed Dec. 23, 2008, in circuit court on behalf of Bank of America Corp. claims that payments on a 2006 loan were not paid beginning Sept. 1, 2008, and then again on the first day of every month since then.

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Organized in Delaware, Martinsburg Mall LLC is part of Prime Retail Inc., based in Baltimore. Prime Retail's parent company is The Lightstone Group in Lakewood, N.J., where the mall's principal place of business is located, according to court filings.

In requesting Wilkes to immediately appoint a receiver, Martinsburg attorneys William J. Powell and Robert E. Glenn said in a memorandum filing that the retail property owner's net operating income involving the Martinsburg Mall was in the red by more than $11,000, if debt service payments had been subtracted.

The 2006 loan in question involved Martinsburg Mall LCC and three "affiliated borrowers" in the aggregate principal amount of $80.9 million, according to the complaint filed in December on behalf of Bank of America by J.E. Robert Co. Inc.

The affiliated borrowers, along with Martinsburg Mall, appear to be Prime Retail properties Mount Berry Square Mall in Rome, Ga., Shenango Valley Mall in Hermitage, Pa., West Manchester Mall in York, Pa., and Bradley Square Mall in Cleveland, Tenn., according to a financial assignment recorded Nov. 6, 2008, with Berkeley County Clerk John W. Small Jr.'s office, records show.

Greg Maloney, president and CEO of Jones Lang LaSalle Inc.'s Atlanta-based retail group, sought to assure the public in a news release distributed Monday by marketing manager Jeff Rossignol that the mall would remain open for business.

"We are well positioned to provide the most comprehensive and dynamic services on this important assignment," Maloney said. "Our leasing and management teams are fully engaged in assessing the mall and its needs. The mall is open for business, and we welcome the entire community to come and shop."

Jones Lang LaSalle said in the news release that the mall's onsite property management team would remain the same, with Robert Gardner as the 555,926-square-foot mall's general manager.

During the receivership process, Jones Lang LaSalle is expected to choose the most appropriate firm to manage and lease the mall, and will provide recommendations for the most profitable outcome of the mall, including possible sale, according to the company.

"As the receiver, the fiduciary responsibility is to manage the property, determine ways to increase the net operating income and find an optimal solution for the lenders," Maloney said.

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