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Crystal River Mall in foreclosure

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New manager sees improvements

CRYSTAL RIVER — Twenty years after opening with much fanfare, the Crystal River Mall has fallen on hard times.

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The owner, Simon Property LLC, closed the mall office about two years ago and virtually stopped upkeep.

The roof leaks, air-conditioning doesn’t work all the time, landscaping is bare and the parking lot contains more empty spaces than vehicles.

Of the mall’s 47 shop windows, about half are empty. While the four anchors — Belk, JCPenney, Kmart and Sears — are still intact, their sales have steadily declined since 2006, according to a report.

And in February, Wells Fargo Bank of Minnesota sued to foreclose on Simon’s $16.3 million mortgage.

The bank asked the court to appoint a receiver to take over management of the mall and Simon agreed, court records show.

That receiver, Boxer Property of Dallas, Texas, took over May 1. The new management is reopening the office and planning to bring the mall into operational order in the hopes of leasing the vacant space.

Boxer Regional manager Ann Kyle said she visited with store owners and was treated like a hero.

“It was like, ‘Oh great, you’ve come to save the mall!’” Kyle said.

Jerry Arcadipane, who with his wife Jenny own FS Music across from Radio Shack, said he hopes the new managers are able to make the mall attractive enough for a buyer.

“I think everyone is a little concerned,” Arcadipane said. “Who knows what the bank will do?”

Reports: Mall in steady decline

The Crystal River Mall opened in October 1990, a prototype for a community mall from the Edward J. DeBartolo Corp.

A DeBartolo profile states:

“Although these generally small town areas offered fewer consumers, developers hoped that their newer, more comprehensive shopping centers would provide the most attractive retail opportunity in the area. DeBartolo’s Crystal River Mall, opened in 1989, was an example of the format.”

The company also banked on something else: Growth would occur north of Crystal River rather than south. The mall included outparcels, which many thought would attract big-name restaurants, and a 549-unit housing development.

That part of the plan never materialized. The county’s growth instead moved toward the center, only one mall outparcel developed and the residential community doesn’t exist. The mall did receive a boost in 1998 when Regal Cinemas opened a nine-screen theater.

Simon Properties bought the DeBartolo Corp. in 2006. The next year, it sold 174 acres of mall property to NCDC LLC, a company headed by Crystal River developer Hugh Tolle.

As the economy took a dive in 2007, the mall began losing its name tenants. Waldenbooks and, more recently, FYE, both vacated their slots.

While Simon filled some of those vacancies with locally owned businesses, such as FS Music, about half the store locations are empty, according to a report Simon presented to contest its 2010 Citrus County Property Appraiser taxable value.

The Simon report showed the mall, in 2009, received $3.2 million in rent and other revenue, clearing $1.4 million in 2009 after expenses.

The report stated all the mall tenants had seen steady declines in sales since 2006.

A hearing officer, backed by the county’s value adjustment board, dropped the mall’s taxable value from $14.8 million to $12.9 million.

According to a report with the U.S. Securities and Exchange Commission, Simon owns 161 malls in the U.S. It has 25 malls in Florida , including the Paddock Mall in Ocala and the Florida Mall in Orlando.

The SEC report shows Simon lists its occupancy rate in 2010 at the Crystal River Mall at 77 percent. Only the Lake Square Mall in Leesburg, at 73 percent, had a lower occupancy rate in Florida among Simon malls. Nationwide, eight Simon malls fell below 77 percent occupancy.

In 2000, Simon received a $16.3 million mortgage on the Crystal River Mall from Credit Suisse First Boston Mortgage. Court records show the mall’s original developer, DeBartolo, borrowed $32 million in May 1990 and the second mortgage included $15.3 million still owed.

The company was to make monthly payments of $115,426 to clear the Credit Suisse mortgage by November 2030, according to court records.

It stopped payments in December 2010 and the mortgage holder, now Wells Fargo of Minnesota, filed suit in February.

While Wells Fargo doesn’t say in its foreclosure lawsuit how much Simon is in arrears, calculations suggest about $3 million.

Wells Fargo asked a judge to appoint a receiver to manage the mall on the bank’s behalf while the foreclosure litigation is pending. An April hearing date was set but canceled when Simon agreed to the receiver.

A judge appointed Boxer Property, a Dallas-based management company. Its charge is to prepare monthly reports to the court on income, expenses and marketing/sales efforts. Boxer is to provide upkeep to the grounds and protect the property’s value for the bank’s behalf, court records show.

Manager: Mall on the rise

It’s nothing but long days for Ann Kyle and Brett Low, the mall’s new manager.

Kyle, Boxer’s regional supervisor of property management, said she wants to assure tenants and the public the mall is on its way up.

Kyle, Low and the mall’s current staff are fixing up the office and making repairs and bringing attention to areas tenants say are priorities: leaky roof, malfunctioning air-conditioning, sparse and neglected landscaping, shabby parking lot.

“Far as I’m concerned, it can’t happen fast enough,” she said.

Kyle said she has helped to start up new malls and managed malls in transition. Her first impression of the Crystal River was of its fabric roof that covers the food court.

“I was intrigued with the tent,” she said. “I thought that gave the mall more style. I liked the way the mall was laid out, like a four-leaf clover.”

Boxer has listings for 24 leasing spots, ranging from 302 square feet to more than 7,000 square feet. All are being offered for $22 a square foot, according to online listings.

“We’ve got to get these spaces leased,” Kyle said.

Kyle said the mall may be in a difficult place today, but she predicted it won’t stay there.

“Nobody ever plans for a mall to fail,” she said. “Somebody built this place and it was spectacular in the beginning.

“If we didn’t think it would work, we wouldn’t have taken the contract.”

Chronicle reporter Mike Wright can be reached at (352) 563-3228 or mwright@chronicleonline.com.