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Commercial Real Estate and Real Estate Investment Trusts [REITs]

Steve & Barry Bankruptcy Further Pressures Malls. U.S. mall owners, already facing declining sales and traffic at anchor department stores, were dealt yet another blow Wednesday with the bankruptcy of once fast-growing retailer Steve & Barry's. Steve & Barry's, which has 276 stores in 39 states, tossed itself into Chapter 11 bankruptcy protection, the latest victim of a steep downturn in the retail sector and tighter credit markets. Mall owners have delayed reimbursing the discount fashion chain for store-opening expenses, further constricting its cash flow… Steve & Barry's… bankruptcy and threatened store closings or liquidation drifts another dark cloud over mall operators already dealing with struggling anchor tenants.” (MarketWatch, July 9th)

Millions In Double JJ Loans Called Due. Michigan: “Just days after a successful music festival on the grounds of the Double JJ Ranch in Rothbury, a South Dakota bank called in millions of dollars in loans. Bank First of South Dakota claims the owners of the Double JJ Ranch haven't paid more than $17 million in loans. The loan was due at the end of February. In a lawsuit filed in Federal Court in Grand Rapids, the bank also claims the resort didn't pay property taxes for the past two years. The bank said they loaned the resort the money for a water park, condominiums and a conference center.” (Wood TV8, July 9th)

Local Mall Headed Toward Foreclosure. North Carolina: “A Burlington mall could be headed toward foreclosure. A complaint filed Monday in superior court says Burlington Square Mall’s current management company failed to make a June payment and that's why the bank wants to take and manage the property… Documents filed Monday say Burlington LLC and Macon LLC were nearly $500,000 short in their June payment. The complaint says that the companies have defaulted on payments since June, and because of the terms of the deed, the bank can take and manage the property if the payments aren't made on time. Lien holder [is] LaSalle Bank National Association.” (News 14, July 9th)

Mall Vacancies And Store Closures At 28-Year-High. “Bloomberg: The average vacancy rate at neighborhood and community malls rose to 8.2%, up from 7.3% in 2007 and the highest level since 1995. At regional and super-regional malls, vacancies increased to 6.3%, up from 5.6 % in 2007. Sam Chandan, chief economist of research firm, Reis Inc.: The amount of retail space being abandoned… is at its highest level in almost 28 years." Retailers --such as Linens 'n Things, Sharper Image… and Levitz Furniture -- have filed for bankruptcy… Growth in rents at neighborhood and community shopping centers dropped to 0.4% in Q2 from 0.5% in Q1 and 0.8% a year earlier.” (Blogging Stocks, July 7th)

Judge Asked To Delay Ruling In Latham Mall Foreclosure Case. NY State: “A judge overseeing the foreclosure petition filed against Latham Circle Mall has been asked to continue to delay ruling on a motion in the case, an attorney said. The motion, which was an order to show cause, is part of the petition that was filed by the lender, LR6-A Latham LLC, in its attempt to foreclose on the property and collect $25 million. LR6-A Latham, which is affiliated with Realty Financial Partners, claims the mall defaulted on a $21M and owes about $4M in interest.” (Albany Business Review, July 7th)

Mall Sold In Tax Auction. Alabama: “A Montgomery businessman who paid more than $20,000 in back taxes on the Montgomery Mall says he wants to gain a clear title to the property and develop it into an office complex. Richard E. Hanan paid the back taxes during a May tax sale, but he only has a partial claim to the property. He must pay the taxes for two more years before it is his, and the mall’s owners can repay the taxes plus a 12% interest penalty at any time and reclaim the property.” (Montgomery Advertiser, July 7th)

Extreme Makeovers For Commercial Real Estate Buoy A Struggling MarketAP: “In November, mall owner Pennsylvania REIT (NYSE:PEI) snagged New River Community College as a tenant for a former theater space in its New River Valley Mall in Christianburg, Virginia. The satellite location features seven classrooms, four computer labs, a science lab, two auditoriums, testing and conference rooms and office space… Shopping malls and strip malls especially are facing high vacancy rates as larger chains begin to falter in leaner economic times. Levitz, Zales, Ann Taylor, PacSun and Foot Locker are closing hundreds of stores this year.” (Nuwire Investor, July 3rd)

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Source: More On Mall Foreclosures [Housing Tracker]