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Peninsula Town Center goes up for auction

Updated: February 18, 2013 - 7:11 am

Posted: February 1, 2013

By Lydia Wheeler

lydia.wheeler@insidebiz.com

Part of Peninsula Town Center will be put up for public auction later this month, but stores will remain open throughout the sale.

The owners of the outdoor shopping center, Peninsula Town Center LLC, an arm of Mall Properties Inc., defaulted on their loan, according to a legal notice published in the Daily Press on Wednesday.

HSBC, a New York-based banking firm, is the administrative agent for the lender and has hired the law firm LeClairRyan to sell the property.

Ray King, an attorney with LeClairRyan's Norfolk office, who is handling the foreclosure, said the highest principal amount secured was up to $168.5 million.

"That's not necessarily the highest amount the loan was for," he said. "I can't disclose the actual outstanding principal."

King said there are 17 tax parcels included in the foreclosure. Collateral property does not include JCPenney, Target or any property owned by the city's economic development authority.

The public auction will be held at noon on Feb. 14 in a conference room of the Embassy Suites Hampton Roads Hotel, Spa & Convention Center, located at 1700 Coliseum Drive.

Built in 2010, Peninsula Town Center is a 1.1-million-square-foot mixed-use development made up of 874,319 square feet of retail, 115,892 square feet of office space and 158 residential units, located at 4410 East Claiborne Square.

Key tenants include Macy's, Barnes & Noble, Cinebistro, Victoria's Secret, Chico's, Hollister, Aeropostale, The Limited, Express, Yankee Candle, Talbots, Express and New York & Company, according to the Mall Properties Inc. website.

King said he has been contacted by several interested parties, but would not give an exact number.

When asked if the potential buyers are financial institutions or private investors, King only said that he's gotten a broad range of interest so far.

He would not estimate how much the property could potentially sell for.

"My job as substitute trustee is to sell the property and obtain the highest property price that benefits the owner, the borrower and the lender," he said.

Though everyone hates to see a foreclosure, Hampton City Manager Mary Bunting said the sale of the Peninsula Town Center is immaterial in terms of the city.

"The city has no part in the construction loan," she sad. "What's going on, as I understand it, is the bank is foreclosing because of nonpayment. I'm told a lot has to do with the late startup of the center, the structuring of the loan and issues surrounding the national recession."

Though the shopping center's owner may be having financial trouble, retail tenants are doing well.

Bunting said the center's retail sales, taxable and nontaxable, amount to $200 million annually.

The property was formerly home to Coliseum Mall, which was torn down after losing too many tenants. Peninsula Town Center, Bunting said, was its replacement and the largest development built in the city in a number of years.

"The development of that property has created a renaissance in our community," she said.

At the auction, the high bidder is required to give a $1 million deposit and close within 30 days.

Post-event coverage

To view a handouts from the speaker, click this link:
Useful Websites Resource Guide.