Demanding rent, Bank of America sues for control of shopping center

Ulf Buchholz

Village Square: Embattled 238,000-square-foot property on Sahara Avenue and Fort Apache Road has a $59.7 million mortgage loan.

By Steve Green (contact)

Fri, Jan 1, 2010 (3 a.m.)

Investors moved Dec. 17 to seize control of a prominent western Las Vegas shopping center, charging its owner has failed to turn over rent to the investors as required.

Bank of America, trustee for investors in a $59.7 million mortgage loan, filed a lawsuit in U.S. District Court in Las Vegas against Village Square Shopping Center LLC, owner of the open-air shopping center at Sahara Avenue and Fort Apache Road. The 238,000-square-foot center is anchored by Regal Cinemas.

The center was developed by Triple Five Nevada Development Corp., which is controlled by the Ghermezian family. The Ghermezians are best known for developing the massive Mall of America in Bloomington, Minn., and the big West Edmonton Mall in Alberta.

A request for comment was placed with Triple Five. Attorneys for the company as of Dec. 28 had not filed a response in court to the lawsuit.

In Las Vegas, Triple Five grew during the boom years with projects such as the Shops at Boca Park at Charleston and Rampart boulevards.

And, like other retail developers, Triple Five has been hurt by the recession.

It shelved plans for the massive Great Mall of Las Vegas in the northwest after defaulting on a $27.6 million loan for the project.

And Moody’s Investors Service said in May Triple Five’s $56.1 million Shops at Boca Park loan was moved to its servicer’s watch list after occupancy at the 277,000-square-foot center fell to 83 percent.

Bank of America said in its lawsuit it filed a foreclosure notice against the Village Square property Sept. 14 and that a receiver should be appointed until the foreclosure sale is completed because the borrower has failed to turn over to the lenders all the rent that they are entitled to.

The suit charged that International Property Syndications Ltd., formerly known as Triple Five Nevada Development Corp., a tenant in its own shopping center, has failed to deposit rent into a restricted account created for the benefit of lenders and investors.

“The appointment of a receiver will assure that the shopping center is appropriately operated, rents are collected, that lease obligations are enforced and pursued and the property is managed in an appropriate manner pending the nonjudicial foreclosure,” attorneys for Bank of America wrote in a court filing. “Simply put, the circumstances in this case demonstrate that income from the real property subject to the deed of trust is in danger of being lost.

“Borrower has failed to cause the Triple Five rents to be deposited in the restricted account for the benefit of plaintiff,” wrote attorneys with the law firm Snell & Wilmer LLP.

Centerline Servicing Inc., special servicer of the loan, has proposed hiring as receiver David Jewkes of Commerce CRG/Cushman & Wakefield Receivership, Property Management and Brokerage Services.

In its proposal to the servicer, CCRG/Cushman & Wakefield is also offering leasing and sales brokerage services for the property.

The Village Square loan, issued in 2007, was syndicated to investors at that time — when the center was 94.5 percent leased, debt rating company Fitch Ratings has reported.

The loan was syndicated through securities called Morgan Stanley Capital I Inc. Commercial Mortgage Pass-Through Certificates, Series 2007-TOP25.

As of June, occupancy had declined to 63 percent in the development’s office component and to 51 percent in the retail component, Fitch has reported.

The loan for the development was transferred to special servicing in February after Triple Five indicated it would be unable to meet debt service obligations, Fitch said.

Dominion Bond Rating Service on Oct. 7 said a March appraisal valued the property at $38.5 million, down 48 percent in two years.