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DeSoto Square foreclosure lawsuit headed to court. Here’s what it means for troubled mall

DeSoto Square mall developer to community: Talk to us

Jerrell Davis, president of Madison Properties Southeast, encourages the Manatee County community to talk to him. Davis is tasked with DeSoto Square mall's redevelopment.
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Jerrell Davis, president of Madison Properties Southeast, encourages the Manatee County community to talk to him. Davis is tasked with DeSoto Square mall's redevelopment.

Amid a flurry of court filings, a show cause hearing date has been set in the foreclosure suit against the owners of the troubled Midtown DeSoto Square mall.

Attorneys for the two sides in the foreclosure suit are set to come before Circuit Court Judge Gilbert A. Smith Jr.’s at 2 p.m. on Feb. 5 in the Manatee County Judicial Center.

Romspen U.S. Master Mortgage LP, a Cayman Islands limited partnership, filed suit to foreclose on DeSoto Owners LLC on Aug. 14.

The suit alleges that the owners of Midtown DeSoto Square defaulted on the payment of $21,889,109.27 that was due June 19.

DeSoto Owners LLC, a Brooklyn, N.Y.--based company, bought the mall for $25.5 million on Feb. 23, 2017. The seller was DeSoto Square Mall LLC, an affiliate company of Namdar Realty Group in Great Neck, N.Y.

In a 2017 press release, Meyer Lebovitz, the mall’s new owner, said he would focus on redeveloping the 678,000-square-foot mall.

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A foreclosure lawsuit against owners of Midtown DeSoto Square is slated for a show cause hearing Feb. 5 in a Bradenton courtroom. One of the mall’s anchors, Sears, is closing this month because of corporate restructuring. James A. Jones Jr. jajones1@bradenton.com

“The location of the DeSoto Square mall within the local community it has served for so many years makes our redevelopment purpose very clear: Make an exciting destination for its surrounding residents to shop, dine and enjoy entertainment,” Lebovitz said in the press release. “We will be adding new retail stores with canopied entries and new free-standing restaurants.”

Lebovitz chose Madison Properties USA LLC to steer the recovery and negotiate with a national cinema company to bring movies back to the mall.

Despite efforts to spruce up the mall, the hoped-for redevelopment never happened. Moreover, Sears, one of the mall’s remaining anchors, is closing its doors this month.

Jerrell Davis, president of Madison Properties USA, previously said that In addition to the improvements and a new 28,752-square-foot theater, he was planning an 18,000-square-foot restaurant complex as a key anchor of the mall.

To date, that has not happened, either.

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A foreclosure lawsuit against owners of Midtown DeSoto Square is slated for a show cause hearing Feb. 5 in a Bradenton courtroom. James A. Jones Jr. jajones1@bradenton.com

Contacted for comment Friday, Davis said that as of Jan. 1, he no longer was involved with management of the mall.

“Effective Jan. 1, we have transitioned over to a new management team,” Davis said.

On Dec. 14, 2018, attorneys for ML Estate Holdings LLC — current owners of the mall — filed their answers and affirmative defenses to Romspen’s foreclosure suit.

“Prior to the closing of DeSoto’s purchase of the Mall and purchase money load from Romspen, both DeSoto and Romspen conducted due diligence on the seller and the mall,” the ML Estate Holdings filing says.

“As it turned out, Namdar blatantly defrauded and grossly mislead DeSoto and Romspen in connection with DeSoto’s purchase of the mall, which was the seller’s one and only asset. Thus, once the seller sold the mall, it was left without any business or assets,” the filing said.

In 2017, the new owners of DeSoto Square mall said they had a new vision for the property, but their plans have stalled as the mortgage holder filed for foreclosure.

In part, the filing alleges that Namdar falsely presented information regarding mall tenants, income, expenses, capitalization and occupancy rates.

In a Jan. 3 filing, Rompsen argued that the defenses offered by the mall owners should be dismissed and that a ruling be entered in favor of Romspen.

“Romspen states that the defenses are legally insufficient because ML Estate asserts fraud by a third party — not Romspen. Indeed, where, as an affirmative defense against the lender, a borrower alleges fraud perpetrated by a seller, the lender is not responsible absent the lender conspiring with the seller or the existence of a special relationship,” the Rompsen filing said.

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