Lakeforest Mall sells for fraction of its former worth in foreclosure auction
The Gaithersburg mall sold Tuesday for $19.1 million to U.S. Bank at a foreclosure auction in front of Montgomery Circuit Court—a sale price far less than the approximately $100 million that Connecticut-based Five Mile Capital paid for the shopping center in 2012, according to The Washington Business Journal.
U.S. Bank bid on the mall as a trustee for the noteholder on the loan the mall’s owner, Five Mile, had used to purchase the property. Five Mile sought to refinance it in mid-2016, but the proposal was not accepted so the foreclosure process began in March. Five Mile owed about $80 million to the bank when it stopped paying loan payments in January, according to the report.
It’s not clear what U.S. Bank plans to do with the mall, which was built in 1978. It still has anchor tenants such as Macy’s, Lord & Taylor, JCPenney and Sears.
The Business Journal reported that the mall’s appraised value has fallen from $218.9 million in 2005 to $40.2 million this year. Five Mile planned to renovate the property, but those plans fizzled out in 2013. Suburban malls such as Lakeforest have been struggling across the country, with dozens closing in the last 10 years as more and more shoppers turn to online retail or outdoor mixed-use shopping centers.
The mall generated about $6.18 million in 2016—more than 50 percent less than the $14.68 million it generated when Five Mile purchased the property in 2012, according to the Business Journal.