Saks Fifth Avenue at Beachwood Place

The landlord for Saks Fifth Avenue at Beachwood Place is in the midst of a foreclosure lawsuit. 

The landlord of Saks Fifth Avenue at Beachwood Place is the target of a foreclosure lawsuit by its lender. The foreclosure will have no impact on operations at Beachwood Place, according to a spokeswoman.

Saks Beachwood Leasehold LLC, a Delaware limited liability company headquartered in Los Angeles, is the target of a foreclosure filing Oct. 6 in Cuyahoga County Court of Common Pleas regarding the Beachwood Place location.

The 11-page complaint filed by Scott Lesser of Miller Canfield Paddock and Stone, P.L.C., of Troy, Mich., states Lesser represents Wilmington Trust, as trustee in trust for Holders of Hudson’s Bay Simon JV Trust 1015-HBS, and regards commercial mortgage pass-through certificates. Hudson’s Bay, founded in 1670 and is North America’s longest continually operating company, acquired Saks in 2013.

“The proceedings initiated by the CMBS lenders have no impact on Saks Fifth Avenue, its stores or its operation,” a Hudson’s Bay Simon spokeswoman wrote in a statement to the Cleveland Jewish News Nov. 23. “This is simply a next step by the lenders to exert pressure on HBS, the owner of the properties. HBS is disappointed that in the context of a global health crisis the lenders would choose litigation over cooperation. With that said, HBS remains committed to resolving issues with the lenders in an amicable way.”

The spokeswoman also forwarded a statement from Saks Fifth Avenue.

“This is a dispute between our landlord as part of the HBS JV and its lender,” the statement reads. “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 is seeking an “in rem foreclosure of a commercial mortgage, appointment of a receiver and other equitable relief.”

Cuyahoga County Treasurer W. Christopher Murray II is named as a defendant as well because of liens 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.

“Borrowers are jointly and severally liable under the notes,” the complaint states.

The three original lenders assigned the loan to the plaintiff on Nov. 23, 2015.

On July 31, 2017, the lender and borrowers entered into a loan extension, extending the loan to July 31, 2020 through “three successive one-year extension options.”

“No further extension options are available under the loan agreement,” according to the complaint.

“The loan is in default by virtue of borrower’s failure to make the monthly debt service payment due on 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, declaring “the entire debt to be immediately due and payable.”

The borrower leased the property to Saks & Company, LLC, of Delaware, a non-party in the lawsuit.

“The operating lessee … has not paid any rent due to borrower since March 2020,” the complaint states.

The financial detail enclosed in the complaint totals more than $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 in estimated yield maintenance.

In addition, Lesser provided calculations for per diem interest of $117,357.11 and per diem default interest of $94,025.55 leading to a total daily interest of $211,383.06.

The lender requested that “all of the property, real, personal or intangible, described in the mortgage be ordered sold and that the lender be paid out of that sale.”

Judge Cassandra Collier-Williams allowed Saks Beachwood LLC until Dec. 9 to move, plead or file its answer.

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.

How do you feel about this article?

Choose from the options below.


Recommended for you