The owner of Saks Fifth Avenue in Beachwood Place is the target of a foreclosure lawsuit by his lender. The lockdown will have no impact on operations at Beachwood Place, according to a spokesperson.
Saks Beachwood Leasehold LLC, a Delaware limited liability company headquartered in Los Angeles, is the target of an October 6 foreclosure case in Cuyahoga County Common Plea Court over the location of Beachwood Place.
The 11-page complaint filed by Scott Lesser of Miller Canfield Paddock and Stone, PLC, of Troy, Mich., States that Lesser represents Wilmington Trust, as trustee in trust for the holders of the Hudson’s Bay Simon JV Trust 1015-HBS, and concerns commercial mortgage certificates of passage. Hudson’s Bay, founded in 1670 and the oldest continuously operating company in North America, acquired Saks in 2013.
“The proceedings initiated by CMBS lenders have no impact on Saks Fifth Avenue, its stores or its operations,” a Hudson’s Bay spokeswoman Simon wrote in a statement to the Cleveland Jewish News on Nov. 23. “It’s just a next step for the lenders to put pressure on HBS, the owner of the buildings. HBS is disappointed that in the context of a global health crisis, lenders are choosing litigation over cooperation. That said, HBS remains committed to resolving issues with lenders out of court. “
The spokesperson also forwarded a statement from Saks Fifth Avenue.
“This is a dispute between our owner within the framework of the JV HBS and his lender,” the statement read. “It has no impact on our business or our operations. We look forward to continuing to serve our customers in the Cleveland area.
On the part of the plaintiff, Lesser seeks an “foreclosure in rem of a commercial mortgage, the appointment of a receiver and other equitable measures”.
Cuyahoga County Treasurer W. Christopher Murray II is also named as a defendant because of the privileges Cuyahoga County holds on the property.
The complaint states that on July 22, 2015, Saks Beachwood Leasehold entered into a commercial loan with three banks for $ 846,229,996 and delivered three promissory notes along with a loan agreement and other documents.
“The borrowers are jointly and severally liable under the notes,” says the complaint.
The three original lenders assigned the loan to the applicant on November 23, 2015.
On July 31, 2017, the lender and the borrowers entered into a loan extension, extending the loan until July 31, 2020 through “three successive one-year extension options”.
“No other extension option is available under the loan agreement,” according to the complaint.
“The loan is in default because the borrower has not made the monthly debt service payment due April 1, 2020 and all subsequent monthly debt service payments due thereafter,” the complaint states. .
The lender called the entire loan on June 12, 2020, according to the complaint, stating that “the entire debt was immediately due and payable.”
The borrower leased the property to Saks & Company, LLC, of Delaware, a non-party in the lawsuit.
“The tenant operator (…) has not paid any rent due to the borrower since March 2020”, indicates the complaint.
Financial details included in the complaint total over $ 1 billion, including the original loan of $ 846 million, plus $ 25.4 million in interest, $ 17.2 million in default interest and 109 , $ 8 million of estimated return maintenance.
Additionally, Lesser provided calculations for daily interest of $ 117,357.11 and daily default interest of $ 94,025.55, resulting in total daily interest of $ 211,383.06.
The lender demanded that “all property, real, personal or intangible, described in the mortgage be sold and that the lender be paid on that sale.”
Judge Cassandra Collier-Williams has allowed Saks Beachwood LLC until December 9 to propose, argue or file its response.
Other Ohio stores include Polaris Fashion Place in Columbus, W. 5th Street in Cincinnati, and Saks OFF Fifth at Aurora Farms Premium Outlets in Aurora.