CHARLOTTE, N.C. -- The owner of Ballantyne Village has restructured its mortgage debt after nearly losing the property to foreclosure, the company announced Wednesday.
BV Retail, which owns the south Charlotte mixed-use shopping center, refinanced its loan, "resulting in the availability of funds for new leases," the company said in a statement.
Ballantyne Village, a 175,000- square-foot development that includes boutiques, restaurants and office space, opened in 2006.
The shopping center had been scheduled to be auctioned off at the Mecklenburg County courthouse in July after lenders started foreclosure proceedings saying the owner, which owed $31.5 million on the loan, had failed to make timely payments.
Bob Bruner, principal with BV Retail, said last year that he wasn't worried. He said that the battered economy and credit crunch had made refinancing difficult, but that the center had "substantial" cash flow.
On Wednesday, Bruner said in a statement that he was "very excited about the recent mortgage restructuring. This step allows Ballantyne Village to continue building upon the unique nature of the shopping center...."
He said the new loan is financed through a commercial mortgage-backed security and that the loan is being serviced by Bank of America.
Bruner also said he will retain 100 percent ownership and control of Ballantyne Village.
UNC Charlotte real estate professor Steve Ott said lenders typically work with commercial property owners when they see potential, such as positive momentum related to leases - and when they'd prefer that the current owner retain control of the property.
"They really are loath to take a property back and get into the business of selling it or managing it," he said. "That property must be at a point where the lender thinks the property has potential and the owner has the ability to bring forth that potential."
Located at a key intersection near the heart of Ballantyne, the shopping center had been struggling with falling rents, according to Trepp, a New York commercial real estate data and analytics firm.
As of March 2010, the village reported occupancy had fallen to 50 percent, according to Trepp.
BV Retail took out a $50 million interest-only loan from Bank of America in 2006, when the residential and commercial real estate markets were near their peaks. The loan, which originally matured in 2008, had three 12-month extensions. The loan, now held by other financial groups, was extended for the second time last year.
BV Retail stopped paying on its loan in spring 2009, according to Bloomberg data.
The shopping center opened with 140,000 square feet of boutique retail and 25,000 square feet of office space. But plans for a hotel, offices and a condo tower were shelved when the economy faltered, eliminating the "captured audience" developers had been counting on to boost sales.
Commercial loans are underwritten based on what a lender thinks a borrower will earn in income, such as rent from tenants or a percentage of sales. An increasing number of commercial properties nationwide have fallen behind on mortgage payments.
Expectations were high for Ballantyne Village, which appraised at $71.2 million in 2006 and reported an occupancy rate of 75 percent, according to Trepp and Bloomberg data.
Housing sales nationwide were slumping, coming off five years of record growth. But businesses and consumers were still spending and the economy was continuing to expand.
When the economy turned, retailers asked for rent concessions. The shopping center was able to improve vacancy rates in 2008, but only by offering cheaper rent, according to Trepp.
Tenants struggled as the financial industry consolidated and laid off workers. One of the most affluent ZIP codes in the Charlotte area, Ballantyne is home to many bankers and others who work in finance.
The shopping center lost a major anchor, Table Restaurant, when it closed in 2008 after being open for just two years. With most entrees priced above $30, Table was known as a destination restaurant for special occasions.
By December 2009, Ballantyne Village had shed more than $40 million of its 2006 value and was thought to be worth around $31 million, according to Trepp.