TOPEKA, Kan. (WIBW) -- West Ridge Mall owner Washington Prime Group plans to let its lender take control of the property in the coming months, saving millions of dollars in the process.
The company made the announcement as part of its end of year guidance filed with the Securities and Exchange Commission on Wednesday. It shows Washington Prime Group would save approximately $3.5 million from its “planned lender transition” of both West Ridge and Wichita’s Towne West Plaza.
Washington Prime Group expects the transition to be completed by October, while the company says the Towne West Plaza will be completed by June.
But that doesn't mean the mall is done, according to Topeka City Manager Brent Trout.
"I can tell you from the experience that we had in Mason City was that the bank continued those leases, they brought in a management company that took over the management of the facility and continued to provide the support that those stores needed," Trout explained.
West Ridge Mall has seen a series of high-profile retailers leaving the mall recently. The latest high-profile departure, Sears, moved out last month. Burlington Coat Factory, Eddie Bauer, Chick-fil-A, Kwan Wah, and GAP have all left as well. Toys ‘R’ Us’ bankruptcy and liquidation last also left West Ridge Plaza without a major anchor.
"It obviously is a concern there are plenty of good stores that in that mall we want to continue to see that its an option for people to shop at," Trout said.
According to the SEC filing, the company owes nearly $40 million on the West Ridge Mall property and another $10 million for West Ridge Plaza across the street. In November, Commercial Real Estate Direct said Washington Prime considered the two shopping centers over-leveraged and quoted them as saying “the property's low debt yield…as reason enough to abandon it.”
Trout hopes West Ridge Mall will continue operating with little hiccup like he saw in Mason City, Iowa.
"The customer that was visiting the mall didn't notice much of a change from the time it was foreclosed on to as the banks began to run it."
Right now 23 percent of the West Ridge leases expire within the year -- but 31 percent continue four years or more.
Commercial real estate tracking firm Trepp reported, as of December, Washington Prime was 30 days delinquent on its West Ridge properties. Several months earlier, in June, Washington Prime Group had re-classified the properties as “non-core,” effectively warning investors they could sell it at any time.
In its financial reports, Washington Prime posted its net income for 2018 at $78.6 million, down over $100 million from the year before ($183 million). It attributed the decrease to lower gains on the disposition of assets, lower gains on getting rid of debt than expected.