Owners of DeSoto Square mall face $21.8 million foreclosure lawsuit. Here’s what it means

The owners of Midtown DeSoto Square mall face a foreclosure suit from lender Romspen U.S. Master Mortgage LP, a Cayman Islands limited partnership.

Madison Properties USA purchased the mall at 303 301 Blvd. W. in April 2017 for more than $25.5 million. Madison borrowed $22,850,000 from Romspen on March 17, 2017, and still owes $21,789,102 million, according to the foreclosure suit filed Aug. 14 in the 12th Judicial Circuit.

Despite the foreclosure action, mall management says it is business as usual.

“It doesn’t affect any of it whatsoever. It is a financial step that ownership has taken,” said Jerrell Davis, president of Madison Properties USA. “The mall is healthy and will continue business as usual. We will see what happens going forward.”

As of June 19, 2018, defendant DeSoto Owners owed Romspen $21,789,109.27 that is due on the loan agreement, note and mortgage, which accrues at the default contract rate, according to the foreclosure suit.

“DeSoto Owners continues to collect rent from the real property without paying their debt to Romspen,” the suit alleges. “Further, Plaintiff reasonably believes that the value of the Real Property is insufficient to satisfy the indebtedness due under the note, and that the value of the Real Property will further decline absent the immediate appointment of a receiver.”

Romspen seeks a judgment against DeSoto Owners for $21,789,109.72, plus prejudgment interest, court costs and attorney fees.

DeSoto Square Mall opened in 1973.

J.C. Penney and Sears, the two original anchors, remain as anchors. In 1992, Dillard’s becomes the third major anchor, and in 2003, Burdines opened as fourth anchor.

In 2005, Burdines became Macy’s.

The Great Recession hurt the mall in 2009 with Old Navy, Dillard’s, Foot Locker and Waldenbooks closing.

In 2012, The Simon Property Group, which had assumed mall ownership in 1996, announced that DeSoto Square was for sale. Mason Asset Management bought the property mall for $25 million.

In 2014, the same year that Macy’s closed its doors, Mason Asset put the mall up for sale via auction. The highest bid was $33.5 million but owners decide not to sell.

Three years later, Mason Asset sold the mall to Madison Properties for $25 million and began renovations and improvements.

“The previous owners had kind of let it go,” Davis told the Herald in December 2017. “They had the mentality of the ‘daily dollar’ and that’s not who we are. That’s the reason it went downhill, but we are the opposite. What made us buy here is basically the community.

“We know if we give them a reason to come back, the community is already here and I believe they want their mall back. That’s what we are going to do. That’s why we bought it, and that’s our intent.”

Davis has previously said that “Going Forward” and “Re-imagine” might be the motto for the mall’s new ownership and its investment of $20 million in the facility.

Another $5.1 million investment is planned to construct a state-of-the-art, 28,752-square-foot movie theater theater with seven screens that would show first-run movies.

In addition to new paint, Davis envisions soft lighting, carpeted areas, new colors, new energy, a remodeled food court and positive interaction with the community.

Also being planned as a key anchor of the mall is an 18,000-square-foot restaurant complex, Davis said.

Within the restaurant complex near Sears would be a casual, sit-down comfort-food restaurant. In the middle would be a new “Frank’s Lounge” designed as a gathering place to get a drink and relax. On the other side would be a steakhouse called Bradenton Prime.