Southridge Mall in Greendale is on its way to foreclosure following an agreement between the mall's owner, Indianapolis-based Simon Property Group, and its lender, JPMBB Commercial Mortgage Securities Trust 2014-C19.
The bulk of the property, located at 5300 S. 76th St., is set to go into foreclosure and be sold through a public auction conducted by the Milwaukee County Sheriff.
It's the latest development in an ongoing lawsuit filed a year ago in Milwaukee County Circuit Court. According to court filings, Southridge Mall owes its lender $121.3 million as of Dec. 6. That includes principal mortgage payments of $110.3 million, plus almost $10 million in interest, and additional fees. And what's more, total interest on the defaulted loan is accruing nearly $26,000 per day.
The mall's debt has been piling up since Simon failed to make mortgage and interest payments due May 6, 2020. After missing the following two monthly payments, Southridge defaulted on its loan and was notified by JPMBB in a letter sent August 2020.
At almost 1.2 million square feet, Southridge is the largest shopping mall in southeastern Wisconsin. At one time the property was anchored by five big-box retailers, Sears, Kohl's, Boston Store, Macy's and JC Penney. As the retail industry continues to evolve - and traditional mall properties suffer - only two of those anchors remain in business today.
Southridge has attempted to fill the vacant anchor space with fresh tenants and attractions such as Dick’s Sporting Goods, Golf Galaxy, Round 1 Bowling, TJ Maxx and Sixty to Escape, which now occupy the former Sears building. Marcus Theatres opened its BistroPlex in 2017 on a leased portion of the mall's parking lot. In July, the Village of Greendale purchased the 219,800-square-foot former Boston Store building for $3.3 million, with plans to redevelop it. The village did not immediately respond to request for comment.
The problems facing malls, which stem from the rise of Amazon and e-commerce over the past decade were only exacerbated by the COVID-19 pandemic. In November 2020, Simon said it intended to relinquish interest in four of its mall properties, including Southridge. According to a report by Kroll Bond Rating Agency, the mall properties were producing net cash flow that was notably below net cash flow generated at the time of origination.
Southridge is currently managed by Syracuse, New York-based Spinoso Real Estate Group, which was appointed by the court in December 2020 to operate the mall during the foreclosure case. Spinoso will remain in its role as receiver until further court order, according to case filings.
A judge needs to sign off on the stipulation and agreement to officially start the process of foreclosure. The sheriff's auction will begin upon JPMBB's request.