Lenders foreclose on Chesterfield shopping center

A Chesterfield shopping center has been foreclosed on after the previous owner defaulted on a $20.2 million loan balance.

Located at 1000 Carmia Way, the Chesterfield Marketplace is a sprawling complex of big-box stores with a spattering of small store space.

According to Trepp, a firm that tracks commercial mortgage backed securities, the loan on the property has an unpaid balance of $20.2 million. Multiple sources have confirmed the property is under receivership by CWCapital, a Massachusetts-based special servicer of CMBS loans. The loan was scheduled to come due in 2014.

The 10.3 acre shopping center is home to a Staples, PetSmart, Rugged Warehouse and TJ Maxx. Home Depot, Toys R Us, and Myrna’s Boots and Bits are also located in the center but own their own parcels. All and all, there is a total of 400,000 square feet of space.

Developed in 1998 by North American Partners, the center was purchased by the Texas-based Tabani Group in 2006 for more than $25 million.

Jim Ashby, a retail broker at Thalhimer who was representing the center for the Tabani Group, said that the center had been negatively affected by the loss of some big tenants: Richmond-based RoomStore closed a store at the center and Linens & Things went bankrupt last year and closed all of its stores.

“Linens & Things was 37,000 square feet; the RoomStore about 40,000,” said Ashby. “That’s a huge chunk of that net operating income out of the center.”

Ashby said the foreclosure of the shopping center is a prime example of how the economy has affected retail commercial real estate. The same situation is playing out around the country as landlords face huge balances on short-term loans on their properties, and at the same time property values are falling and refinancing is hard to come by for many.

Last month the Hungary Brook Shopping Center near Paraham and Brook roads in Henrico went into foreclosure for defaulting on a $5.5 million CMBS loan.

The Chesterfield Marketplace property was last assessed by the county at $19.5  million. The previous year it was assessed at $30.63 million.

The center has perhaps had a tougher time filling vacancies during the recession because mostly large space was available. It is located off of the main road of Midlothian Turnpike and development farther west is pulling potential tenants away.

CWCapital will likely hire a firm to manage the property until it can be sold for an amount that is favorable to debt holders, Ashby said. In the meantime, the new owners will have to try and fill in the empty space.

“If those anchor vacancies aren’t filled up quickly, the other tenants might take off when their lease comes up for renewal,” he said.

Ashby said he has seen a slight uptick recently in tenants moving into small shop space, but national chains that typically fill large space have been slow to add stores. One exception is the hhgregg that recently took over a vacant Circuit City space nearby.

Costco is also planning to build a 154,000-square-foot store adjacent to Chesterfield Marketplace. The company recently submitted site plans for that project, which you can read more about here.

Al Harris covers commercial real estate for BizSense. Please send news tips to Al@richmondbizsense.com.