Updated March 12, 1:43 PM
I had been skeptical of the notion in some circles that Developers Diversified was facing the same kinds of problems as General Growth Properties. But a report has emerged in the Kansas City Star that one of the properties DDR owns in a joint venture is facing foreclosure. It's just a single property, but it's not good news. Does this mean more clouds are gathering for the company?
Updated: Developers Diversified sent me a statement about the situation. It is pasted below:
As a result of our majority partner's failure to fund a mortgage paydown for Ward Parkway, Babson/Mass Mutual initiated a “friendly foreclosure” of the shopping center. Babson/ Mass Mutual anticipates obtaining ownership of Ward Parkway Shopping Center as a result of the foreclosure, although the property is being marketed for sale. Developers Diversified is in negotiations to continue to manage and lease the shopping center in the interim period. “Developers Diversified has fulfilled our obligation and we have no obligation to fulfill our partner's obligation,” said David Oakes, senior executive vice president of finance and chief investment officer.
Ward Parkway Center, which remade itself in recent years with an A-list of discount retailers, is facing foreclosure.The lender that financed the sale of the enclosed mall in 2003 has filed a legal notice saying that the mall's joint venture owner has defaulted on its debt.
The notice stated that the landmark property at 8600 Ward Parkway, which remains open for business, is scheduled to be sold on the steps of the Jackson County Courthouse on March 26.
Officials of the lender, Massachusetts Mutual Life Insurance Co. of Springfield, Mass., could not be reached for comment Monday.
The owner of the mall, Coventry II DDR Ward Parkway LLC, is a partnership between Coventry Real Estate Partners of New York and Developers Diversified Realty, a publicly traded shopping mall owner in the Cleveland area. Coventry holds an 80 percent stake in the venture and Developers Diversified holds a 20 percent stake.