Tenants at the Centre of Tallahassee have nothing to worry about, even as the building emerges from a foreclosure auction sale. Tuesday’s auction of the old Tallahassee Mall mostly amounts to a reorganization of debt, though the long-term outlook on such commercial spaces remains bleak.
A lot of money went into refurbishing the old Tallahassee Mall, and more went into it when several state offices moved in. In total, the lender, a Delaware-based firm, filed a value of $84 million on the property. It was sold back to the lender, ACRC TFL Owner LLC, an assignee of ACRC Lender W LLC, for $12,100 in the foreclosure auction Tuesday.
One expert who deals with local commercial real estate suggests what may have happened is that the original loan on the building matured, and the lender and owner couldn’t agree on a new deal. Under this scenario, the two would have entered into what’s called a “friendly foreclosure.” That’s when a lender bids at a foreclosure auction in order to get a discount. Such scenarios happen when a new lender can’t be found or the parties can’t agree on a new payment structure. The lender will likely be on the hook for much more than $12,100.
Many of the mall tenants have long-term leases, between 10-15 years as has been previously reported, and so the mall itself will remain. But the foreclosure coupled with the present state of commercial real estate, does have the industry concerned.
Malls across the U.S. are emptying. And that, coupled with higher mortgage rates, may force similar scenarios across the commercial real estate sector as mortgage holders struggle to keep up with higher payments.
The auction was only live for a few minutes. According to an official with the Leon County Clerk of Court, the system allows bidders to set auto bids and limits in addition to set offers. The lender, according to the Clerk of Court, had established a pre-set purchase limit that triggered its automatic winning bid, which was higher than other offers, but far short of what's owed on the property. The buyer must still pay the doc stamp taxes, though it doesn't have to pay itself the $12,100.
