Foreclosure Auction Set for Largest San Francisco Mall
After more than a year in receivership, a trustee for lenders has notified the owners of San Francisco's largest downtown mall that the property will be sold at a public foreclosure auction on Nov. 14 to the highest bidder.
First American Title Insurance Co. notified entities affiliated with international mall operator Unibail-Rodamco-Westfield (URW) and Brookfield Asset Management that it will sell the deed of trust on the 1.5M SF mall, formerly known as the Westfield Centre and rebranded by its receiver as Emporium San Francisco Centre.
Proceeds from any sale at the auction will be used to pay an estimated $626M in debt backed the property and owed to lenders Deutsche Bank and JPMorgan Chase, the San Francisco Business Times reported.
If no third-part bidder emerges to acquire the mall, the lenders have the option of mounting a placeholder bid to foreclose on the property and formally seize the mall from URW and Brookfield, the report said.
URW and Brookfield announced in June 2023 they would stop making payments on a $558M CMBS backed by the mall, located at 865 Market Street at the intersection with Fifth Avenue adjacent to Union Square. The announcement came in the wake of a decision by anchor tenant Nordstrom to vacate its 300K SF store at Westfield Centre, citing unsafe conditions in the downtown area.
In October of last year, a San Francisco Superior Court judge appointed Gregg Williams of Trident Pacific as receiver given custody of the half-empty mall. Last fall, AE Retail West, parent company of fashion brand American Eagle, sued the Westfield Centre owners, claiming they failed to address more than 100 "significant security incidents" at its American Eagle store in the mall between May 2022 and May 2023.
In January, the Union Square mall was appraised at $290M, a 75% loss compared to a 2016 valuation of $1.2B, according to Morningstar Credit Analytics.
Earlier this year, Trident Pacific tapped JLL as the operations manager and leasing agent at the Emporium Centre. The receiver and manager said they were aiming to revitalize the mall with "experiential" tenants and would consider filling vacant floors with live programming, including music and art shows.
In June, the operators announced the signing of seven new leases at the mall, including Hey Hi Toys, A&S Cell Assessories and Repairs, and Paw Box, described as a pet vending machine pilot project that dispenses treats, SF Gate reported.
Two of the new leases involved office space, including 17K SF that was leased by Opportunities for All, an organization that connects young people with career resources. Block by Block, service provider of the nonprofit Yerba Buena Community Benefit District, also is leasing space at the mall.
In a statement last week, Williams said the notice of the public auction "simply reflects that the lenders are moving forward in the foreclosure process as planned."
"The receiver will continue to diligently manage the property until a new owner is in place and will work hard to ensure a seamless transition when the time comes," Williams said.
Source: GlobeSt/ALM