Utah's first open air "lifestyle center," The Shops at Riverwoods in Provo, is in foreclosure after the owners defaulted on mortgage payments in November, December and January.
Bank of America NA, which now holds the split mortgage loans after a succession of loan acquisitions, seeks the entire outstanding principal, plus interest — $30.6 million, according to documents filed March 17 in 4th District Court in Provo.
On March 25, both the bank and the mall's owners, Terranet Investments LC — comprised of investor partnerships in Utah and California — asked the court to appoint Salt Lake real estate firm Commerce CRG as a receiver. Commerce CRG now collects rents from retailers, manages the mall, and is selling the property. The Shops, located at 4801 N. University Ave., are only about 65 percent occupied.
The foreclosure most likely will not affect shoppers to the upscale development, which opened in 1998 and added housing and an office complex in phases. The housing and office portions of the development are not in foreclosure. "As far as operations of the center, it's continuing to operate as it had previously," said Kevin Flanagan, chief financial officer for Provo-based Esnet Corp., a member of mall-owner Terranet Investments.
Flanagan confirmed media reports that the center suffered with the 2003 closure of Eddie Bauer and 2007 closure of Copeland Sports. The owners of Eddie Bauer and Copeland closed the Provo stores as part of bankruptcies. The stores were among the largest tenants at the Riverwoods. The Gap and Banana Republic, which were among original tenants at The Shops, also closed doors. More recently, Abercrombie & Fitch Co. and Ann Taylor have closed.
With a rental shortfall in some years up to $1 million a year, Esnet had been subsidizing the difference in mortgage payments. "We tried to hold onto it for a period of time, but this economic downturn" made it impossible for a turn-around in the near term, said Dan Campbell, an Esnet managing general partner.
With new owners, the Riverwoods could become an outlet mall, or could be owned by a group that specializes in community retail, "or have enough retail malls across the country that they can leverage (retailers) into that site (by saying), 'If you want five locations, you have to put one into The Shops,'" Campbell said.