The ownership of Citadel Mall and the nearby West Ashley Shoppes changed hands at a court-supervised foreclosure sale Tuesday, setting the stage for a future sale of the retail properties.
A representative for Citadel Mall's mortgage holders set the minimum bidding at $65 million, but no competing offers were submitted at the public auction in downtown Charleston.
A new entity formed by the lenders in July now owns the property outright and will oversee its operations until the ailing shopping center can be resold.
The previous owner, a company affiliated with Tennessee-based shopping center giant CBL & Associates Properties, owed more than $64 million from a $75 million loan it borrowed in 2007, right before the recession hit. The 33-year-old shopping center served as the collateral.
CBL began missing mortgage payments in May, and Spinoso Real Estate Group was appointed by a judge in September to run the 1.1 million-square-foot mall. New York-based Spinoso will continue to operate the center for the new owners, said Robert Kerr, Spinoso's attorney.
"Banks have had to take back a lot of properties since the recession, including commercial ones like Citadel Mall," Kerr said. "In the last five to seven years, they've gotten really good at it."
Tenants typically aren't affected by such ownership changes.
"Customers, retailers and vendors should see no changes in the day-to-day operations of the center," a representative of the mall said in an emailed statement.
Also, the mall's large anchor tenants were not directly affacted by the foreclosure because they own their store sites.
Citadel Mall was one of two large neighboring retail centers on the auction block Tuesday at the Charleston County Master of Equity. West Ashley Shoppes, which is across Orleans Road from Citadel Mall, also changed hands after falling into financial trouble.
The mortgage lender, which also established a new entity to serve as the new owner, set the minimum price at $18.3 million, about $6 million less than it was owed. No one else bid.
The former owner, WA Shoppes LLC, borrowed more than $20 million in 2006 to buy the shopping center that's anchored by World Market and Bed Bath & Beyond. After missing several monthly payments of $122,000 last summer, the Delaware-based company defaulted and the property went into foreclosure.
West Ashley Shoppes is 95 percent occupied, with 18 tenants. Its former owner never filed a formal response to the foreclosure lawsuit, according to the Charleston County court records.
Galen Hudson, who owns Monster Music and Movies in the shopping center, said business hasn't been suffering lately.
"A lot of people say Citadel Mall looks like a ghost town, but nobody in our center has really been complaining," he said.
The creditors in both foreclosures originally planned to reopen the bidding in February, but they changed their minds.
Editor's note: This story has been updated to reflect that Spinoso Real Estate Group will stay on as Citadel Mall's property manager.
Reach Abigail Darlington at 937-5906 and follow her on Twitter @A_Big_Gail