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CBL’s Chesterfield Mall Headed for Receivership

Updated - Ruling Requires REIT to Turn In Keys for 1.3-MSF Mall Over to Special Servicer
August 16, 2016
Judge John Warner Jr. of the Circuit Court of St. Louis County granted a request by U.S. Bank to appoint a receiver for the 1.3 million-square-foot Chesterfield Mall after the lender filed a lawsuit last month claiming CBL & Associates Properties had defaulted on repayment of a $140 million loan secured by the mall.

The Circuit Court last week granted the bank’s request to appoint Madison Marquette Retail Services to take immediate possession of the property at 291 Chesterfield Center in Chesterfield, MO, near Interstate 64 and Clarkson Road.

According to court documents filed last month, U.S. Bank, acting through C-III Asset Management LLC, asked the court to appoint Washington, D.C.-based Madison Marquette to collect rents and take possession of the property. The unpaid principal balance of the loan is $140 million, and the value of the mortgaged property, less rents and other proceeds, is estimated at $63 million, U.S. Bank said in its petition.

Westfield Group sold the Chesterfield Mall, along with three other St. Louis area malls, to CBL in 2007 as part of a transaction valued at more than $1 billion. In its first-quarter 2016 financial statement, CBL listed Chesterfield as a lender property, indicating a potential workout attempt with the mortgage holder.

The mall is one of several designated for repositioning by CNL. With newer competition in the market, the mall has struggled with declining sales in recent years as several large retailers have departed. The mall also has exposure to Macy’s, which announced last week that it intends to close 100 yet-to-be identified stores across the country.

In the latest disposition of non-core malls, CBL closed the sale of the 797,251-square-foot Fashion Square Mall in Saginaw and the 613,313-square-foot The Lakes in Muskegon, MI, for $66.5 million.

Competition from two outlet malls opened by Simon Property Group and Taubman Centers in Chesterfield in 2013 have cannibalized sales at older properties, including the 1.2 million-square-foot St. Louis Outlet Mall in Hazelwood, MO, 16 miles northwest of downtown St. Louis, which sold in February 2016 for just $4.4 million, or $3.75 a square foot.

Editor's note: This update includes a correction regarding the Macy's store in Chesterfield Mall. The retailer announced that it would close 100 full-line stores, but hasn't yet announced the store locations to be closed.

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