CityPlace defaults on $150 million mortgage

(Palm Beach Post staff file photo)

(Palm Beach Post staff file photo)

Back in February, Fitch Ratings warned that CityPlace faced “imminent monetary default” on its $150 million mortgage. Now, the shopping-and-entertainment hub in West Palm Beach has defaulted on its loan, according to commercial real estate research firm Trepp.

Trepp said CityPlace was paying an interest rate of 6.27 percent on the mortgage. CityPlace didn’t entertain questions, but the landlord released this statement:

CityPlace Partners proactively engaged the special servicer in an effort to seek flexibility from our lenders and ensure the long-term success of CityPlace. We have continued to significantly reinvest in the property and are seeking to realign the retail loan with the dramatic shift in economic conditions that have impacted the property. CityPlace has revitalized West Palm Beach and not only employs thousands of local residents but generates tens of millions of dollars in tax revenue for the City and County and it is our sincere hope to continue discussions in good faith in an effort ensure the long-term success of CityPlace.

In the world of big-money real estate, a default doesn’t necessarily mean an owner loses the property. CityPlace was hit with a foreclosure in 2011, but Stephen Ross’ CityPlace Partners kept control of the center.

CityPlace is something of a commercial real estate paradox. It combines bustling crowds with a constant cash crunch — a conundrum some blame on the center’s continual turnover of restaurants. While CityPlace packs in the crowds on weekends, the comings and goings of its tenants are legion.

The roster of eateries that have left over the years includes Bacio, Brewzzi, Carousel Can Can Cafe, Cheeburger Cheeburger, Columbia, Field of Greens, Italian Oven Cafe, Jinja Bar, Kona Grill, La Salsa, Legal Sea Foods, Mark’s CityPlace, McCormick & Schmick’s, Original Steakhouse, Taco Vida, Taverna Opa, Tsunami and Wild Olives. When a tenant leaves, the landlord is forced to eat a variety of costs, including lost rent and legal expenses, plus tenant improvements and brokerage commissions for the replacement restaurant.

 

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