It's business as usual for tenants in Valu Food Festival, as its owners work to stabilize the financially troubled strip shopping center.
Annapolis Retail Limited Partnership has lost money on the Severna Park center for about a year, said Erik D. Bolog, an attorney with David & Hagner, the Washington firm representing the partnership.
The partnership, which filed for bankruptcy protection last month, is preparing to reorganize in hopes of keeping the center going. But the developer's financial woes haven't trickled down to the shops and service-oriented businesses at Ritchie Highway and Robinson Road.
Valu Food, which occupies the greatest amount of space, has no plans to close or move elsewhere, spokesman Paul Marsiglia said. And though businesses have come and gone in the five years since the center opened, a core of original tenants has stayed and prospered.
One of them is La Petite, a women's apparel boutique specializing in petite sizes. Owner Mary Ellen Hostetter says sales have increased each year. She's looking to expand into a larger space.
Like La Petite, Bonnie Hill Florist has established a following
and done well.
But the center never attracted much walk-in traffic, driving other merchants out of business.
Of the 19 original tenants, nine have moved out. The center is now 85 percent leased, with 21 tenants.
"I have seen them come and go," said florist Bonnie Hill, who has had three different next-door neighbors in five years.
To the dismay of both Hill and Hostetter, the center never became the strip of upscale boutiques merchants were promised when they moved in.
On Sept. 20, the partnership controlling the center filed for bankruptcy protection after falling behind on loan payments to New York-based Metropolitan Life Insurance Co. MetLife claims it is owed $12.8 million. The partnership lists assets and debts of more than $100,000.
Bolog attributed the center's troubles to a weak real estate market.
Though he couldn't discuss specifics of the case, Bolog said many strip shopping centers built in the mid- to late 1980s have suffered.
"The rents they thought they'd be getting, they're not get
ting," he said. "The amount they're taking in is less than the interest they're paying."
The partnership, in which Dallas-based Trammell Crow Co. is a limited parter and Texas-based Crow-Robinson Limited Partnership isgeneral partner, has 120 days from the bankruptcy filing date to send the court a reorganization plan.
Arundel Retail also has filed amotion to deliver rents collected from tenants to the partnership, instead of the bankruptcy court, so it can pay expenses, Bolog said. Ahearing on that motion has been set for Oct. 24.
When it found itself in trouble last March, Trammell Crow sought a restructuring of loan payments from MetLife. Trammell Crow then fell behind on three monthly installments totaling $304,687. MetLife filed suit Aug. 27, asking Anne Arundel County Circuit Court to appoint a receiver to take over the project.
The court found the partnership in default of itsloan and on Aug. 28 appointed a receiver, Fair Lakes Management Co. of Fairfax, Va.
But before the management company took over, the partnership filed for protection, in effect turning property over to the bankruptcy court.
Bolog said a reorganization plan will attemptto turn the center into a moneymaker. He couldn't elaborate on the plan and said that it was too early to know whether the center or a portion of it would be sold to repay debts.