Woodbury Lakes headed for foreclosure, Oct. 1 sheriff's sale
The Woodbury Lakes retail center, arguably the city's premier shopping area, soon could be up for grabs.
Owner Woodbury Lakes Retail defaulted on a $65 million principal mortgage for the complex on Hudson Road west of Woodbury Drive. The property is headed for foreclosure and an Oct. 1 sheriff's sale, according to a legal notice.
The Delaware-based firm failed to make monthly mortgage payments in March, April, May and June of this year and owes a total of $78.5 million, according to the foreclosure notice and Washington County court records.
The mortgage is held by another Delaware-based limited liability company, DMARC, which filed a civil case against Woodbury Lakes Retail in Washington County District Court.
Development firm Opus Northwest built the 400,000-square-foot open retail center in 2005.
Mayor Bill Hargis said the situation is a concern, but the city still will collect property taxes due. He acknowledged Woodbury Lakes has not filled all of its storefronts, but said he believes mall's vacancy rate should not typically trigger a default.
"I think it is a very viable center in the long run," Hargis said. "Everybody has issues with the economy the way it is. In the long run it's in a good location and well built."
Minnetonka-based Welsh Companies is serving as a court-appointed manager for the retail site. Woodbury Lakes is just over 75 percent occupied and Welsh Companies is courting businesses.
"We're doing everything we can to keep tenants," said Mark Parten, Welsh's senior vice president.
There are 53 shopping outlets and one dining option listed on the center's Web site. Paul Skram of Welsh Property Management said the firm expects an Asian cuisine to open this year and a Melting Pot location to open in 2010. The retail center lost one store this year.
"It's not gloom and doom," Skram said, adding that he is confident the Woodbury Lakes ownership issue will get worked out and there will not be a sheriff's sale.
Hargis said Woodbury in the past was pressured to develop more retail projects, but struck the right balance in planning commercial development that focused more on office space than on retail.
"We kind of took a little more conservative approach to that," he said. "This bump in the road validates those decisions."