Westview Mall owner files for Chapter 11 protection

April 01, 1994|By Ross Hetrick | Ross Hetrick,Sun Staff Writer

The owner of Westview Mall, one of the grand dames of local shopping complexes, has filed for Chapter 11 bankruptcy protection with its major debt being a $27 million loan from the Bank of Montreal.

The bankruptcy petition was filed by Westview Mall Associates, a limited partnership set up by Balcor Co., a major national commercial real estate company based in Skokie, Ill. The mall, at the intersection of Route 40 West and the Beltway, was purchased by the limited partnership in August 1989.

Daniel A. Duhig, first vice president of Balcor, yesterday declined to say why the company made the filing. "We don't comment on mattersin litigation," he said.

A representative of the Bank of Montreal also declined to comment.

However, Mr. Duhig said the company hopes to emerge from Chapter 11 bankruptcy quickly with the filing of a disclosure statement and reorganization plan in the next month. In many Chapter 11 proceedings, reorganization plans are not filed for a year or more.

"We want to get in and out as quickly as possible," Mr. Duhig said. "It's in everybody's interest."

The major debt is the $27 million mortgage held by the Bank of Montreal, Mr. Duhig said. Other debts total about $100,000, which is owed to various trade creditors, he said. The limited partnership's primary asset is the mall itself, which has not been valued for the case, Mr. Duhig said.

It has been a common strategy of some developers to file for Chapter 11 bankruptcy when a major repayment of a loan -- called a balloon payment -- comes due and the lender is not willing to refinance, according to J. Lawrence Mekulski, a partner in the retail division of KLNB Inc., a major local real estate brokerage and management company.

"It ties the lender's hands and puts up roadblocks," said Mr. Mekulski, who does not have any personal knowledge of the Westview Mall case. "They are negotiating with a lender and this is a way of doing it," he said.

The filing comes only three years after a $30 million renovation and expansion program that repositioned the 36-year-old complex as a discount-oriented mall. The 662,000-square-foot center is more than 90 percent occupied and sales at the 65 mall stores were up 6 percent to 8 percent last year, according to David H. Nevins, president of Nevins & Associates, the mall's public relations firm.

"The mall is doing very well . . . The tenants are strong in this operation," Mr. Duhig said. The Chapter 11 filing "will not affect the quality of service a customer receives," he said.

Built in 1958 by the Joseph Meyerhoff Co., Westview began its life as an open-air strip center catering to the silk stocking trade with the department stores of Hutzler's and Stewart's anchoring the center.

Balcor expanded the center by 150,000 square feet and brought in such popular retailers as Marshall's and T. J. Maxx as anchors. It has also added a 10-screen theater complex run by United Artists.

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