Steadfast Commercial Properties, which owns most of the main building and about two-thirds of the shopping area's 63 acres, needs to come up with $8 million in overdue interest and fees by July 9 to avoid foreclosure on $98 million it borrowed in 2007. A trustee for the lender, Royal Bank of Canada, published a notice of foreclosure last Monday in The Herald.
Three other companies have a stake in the shopping area and are not involved in the loan or possible foreclosure. And should foreclosure happen, it will likely be business as usual, even for the tenants and customers of the portion owned by Steadfast. The bank, after all, would want the mall to continue as a going business so it can be sold.
"We all want the mall to survive," said Tom Bayley of C.D. Stimson Co. in Seattle, which owns about 12 acres, including the adjoining Macy's building. "I think it's a location that will always survive."
Irvine, Calif.-based Steadfast bought the mall for $50 million in 2004. Everett Mall's previous owner, Titanic Associates, a New Jersey-based partnership, defaulted on a $55 million mortgage in 2000. The following year, Titanic's main lender, Equitable Life Assurance Society of the United States, took over ownership and hired a property management company to oversee operations until Equitable found a buyer in Steadfast.
When Steadfast took over the mall in 2004, it quickly infused more than $30 million in remodeling and expansion.
Steadfast oversaw the addition of the Regal Cinemas Stadium 16 theaters. It demolished an aging strip mall on the west side of the property, built new buildings and attracted Bed, Bath & Beyond, Best Buy and TJ Maxx. Steadfast also gave the front of the mall a facelift.
Whether Steadfast has the time and the capital to weather a foreclosure remains to be seen. Steadfast did not respond to a request for comment. The published notice of sale seemed to imply that none of the principal had been paid on the $98 million loan. The 10-year mortgage comes due in 2017.
"To turn a mall around, it takes time, patience and, obviously, capital," Patrick Cox, a Steadfast Cos. partner, told The Herald in 2005.
Said Bayley, recalling the early days of Steadfast's ownership: "Those guys worked really, really hard."
C.D. Stimson Co. subsidiary CDSN for many years has owned the Macy's building and the Goodyear tire store site. It also owns the more recently developed building just north of the main building, where Jimmy John's and the Vitamin Shoppe are located.
In 2007, Steadfast sold the new buildings on the west side of the parking lot to a third company, SJ Realty Investments, for nearly $22 million. Mano Realty Investments later bought the other section of what is known as the Village, which now houses TJ Maxx and PetSmart.
In early 2008, just before the recession set in, Steadfast owned four other malls in the U.S. -- two in California, one in Oregon and The Commons in Federal Way. Early in 2010, the company transferred ownership of Heritage Mall in Oregon back to a lender.
Steadfast still owns dozens of apartment buildings across the country, as well as three resorts in Mexico. It also owns a mall in Mexico and an office building in California.
Last week, Lisa Whitney, vice president of Steadfast Commercial Management, noted in an email that Everett Mall has not been immune to the retail industry's troubles, brought on by the 2008 economic recession. Whitney said the company has developed a new long-term plan for revitalizing Everett Mall and is continuing discussions with the lender, she said.
If it comes to a sale by Royal Bank of Canada, Bayley doesn't think it likely that C.D. Stimson would be a buyer.
The company passed when the owner previous to Steadfast defaulted on its loan, he said.
But there are other companies that will be interested in buying Steadfast's portion. Bayley said he would be surprised if Steadfast doesn't already have offers. A new owner could do as Steadfast tried when it took over Everett Mall: renovate and attract popular retailers that will draw consumers.
Michelle Dunlop: 425-339-3454 or email@example.com.
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