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A Chicago-based development corporation that specializes in revitalizing ailing real estate bought The Shops at Atlas Park, which went into foreclosure in February 2009, for $53.75 million at a bankruptcy auction Friday.
If all goes according to the schedule set by the bankruptcy court, the new owners of the troubled Cooper Avenue mall will take over Feb. 28.
The winning bid was placed by David Joseph, Walton Street Capital principal, according to the referee of the auction.
But Paul Millus — a lawyer from the Manhattan law firm of Snitow, Kanfer, Holtzer & Millus LLP and the man who has run the shops since the foreclosure — said some people associated with Walton Street Capital have ties to another firm that was interested in purchasing the property last year.
That firm’s name was McCaffery Interests, which is a Chicago-based company that specializes in developing under-performing urban real estate.
That association led Millus to believe that the new owners will continue to operate a retail space at the high-end mall in Glendale, he said.
“Obviously that whole group didn’t go forward with the purchase,” Millus said.
According to Walton Street Capital’s website, the corporation uses a strategy “which aggressively seeks to redevelop or reposition under-managed and under-capitalized assets to appeal to a broader, institutional marketplace.”
Gary Giordano, district manager of Community Board 5, said he thinks the mall can succeed as long as it has proper management.
“Who wants to see a bunch of empty stores sitting there? The question is what will work there and how to get people who know the retail business to really be involved,” he said. “I don’t think that has been the case.”
Millus said Atlas Park tenants expressed dissatisfaction with the way the mall was run before the foreclosure by owner Damon Hemmerdinger.
“I think that there was clear dissatisfaction with the way the Hemmerdingers were running it,” he said.
Hemmerdinger defaulted on a $127 million mortgage held by his French creditor, Agricole Corporate and Investment Bank, formerly known as Calyon. Due to $8.98 million that was stored in a third-party escrow account, the debt was reduced to $119 million.
Only two bidders appeared at Queens Supreme Court, at 88-11 Sutphin Blvd., for the minutes-long auction. The losing party was represented by Anne G. Shean, who in 2009 was a managing director of the same French bank holding the defaulted loan.
Shean’s opening bid was for $50 million.
Dennis Capello, the referee for the auction, said the low price tag for the property — under half of the $119 million mortgage — did not shock him.
“I wasn’t surprised that it didn’t go to $119 million,” he said. “Both people bidding did a lot of number crunching to find out what sort of price would make this thing work.”
The shops started out with Hemmerdinger’s vision of a high-end retail mall in the area, but that vision did not pan out.
In February 2009, after three years of running the mall, Hemmerdinger’s creditor foreclosed the loan and turned over the shops to a Millus, the court-appointed receiver.
Reach reporter Joe Anuta by e-mail at firstname.lastname@example.org or by phone at 718-260-4566.
©2011 Community Newspaper Group
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