Interest growing on judgment in Promenade Shops lawsuit. BizWest file photo

Bank likely to take title to Promenade Shops when no one bid during foreclosure auction

Editor’s note: This is a developing story and will be updated.

FORT COLLINS — The room was silent when Lauren Mehl, deputy public trustee, called for  bids on the troubled Promenade Shops at Centerra Wednesday morning.

The shops were the subject of a foreclosure auction, conducted by the public trustee, in an attempt by the mall’s lender to recover nearly $87 million from the mall’s owner, DRA Advisors LLC, operating as G&I VI Promenade LLC and G&I VI Retail Prom LLC. 

The lack of bids likely means that the lender, Wilmington Trust NA, a trustee for Natixis Commercial Mortgage Securities Trust, will secure title to the property once the redemption periods expire. What it will do is unclear. William Meyer, an attorney with Polsinelli PC representing the lenders, did not return a phone call after the sale. 

The Promenade Shops encompasses 493,172 square feet of retail and entertainment space at the northeast corner of Interstate 25 and U.S. Highway 34.

Wilmington Trust NA initiated foreclosure in February, claiming that the owner defaulted on an $83.65 million promissory note.

Before the sale, Meyer told BizWest that the owners of the mall had not been able to cure the default. “It doesn’t look like it’s going to get cured.”

David Brewster, an attorney with Otten Johnson Robinson Neff Ragonetti PC, representing the owners, did not respond to requests for comment either before or after the sale.

In cases like this, according to the public trustee, title would pass to the bank unless junior lien holders step forward during the eight business days after the auction. If there are no junior lien holders, the title passes to the bank at the close of the eighth business day.

The Promenade Shops foreclosure marks the second time that the property has fallen into foreclosure since its construction in 2004. The property went into foreclosure in 2009 and was acquired by a subsidiary of former lender Keybank for $85 million. DRA Advisors, a New York City-based real estate private equity group, purchased the property for $75.5 million months later.

DRA has been attempting to sell the property since May 2020, listing it with commercial real estate brokerage Jones Lang LaSalle Inc. The property does not include the Macy’s Inc. store, which is under separate ownership.

The Promenade Shops was developed by Loveland-based McWhinney Real Estate Services Inc. and Memphis-based developer Poag & McEwen.

The partners were involved in protracted litigation that ended in May with a $156 million judgment against Poag & McEwen and individuals connected with that company. Terry McEwen, who the court determined was responsible for 15% of the damages, has appealed.

Clyde Wood, vice president of commercial development for McWhinney, was in the audience at the foreclosure auction but did not speak and declined to comment after the sale. McWhinney through its public relations contractor said, “McWhinney continues to monitor the Promenade Shops at Centerra foreclosure process and remains interested in the long-term success of the lifestyle center.”

Wood will be the point person on McWhinney’s redevelopment of the Foothills mall property, which McWhinney and a partner recently bought for $45 million. Foothills, a 662,000-square-foot mall property in midtown Fort Collins, had also been in foreclosure.

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