The loan secured by three malls including Stony Point Fashion Park in South Richmond is delinquent, according to Trepp LLC, a New York-based data and research provider for the commercial real estate market.
Starwood Retail Partners, which bought Stony Point and two other malls in 2014, still owes $135.7 million on the original $161 million loan that was due to the lender on Nov. 8.
Starwood failed to pay off the loan scheduled in November, Trepp said. A special servicer has started a 60-day forbearance — or a holding back period — as it tries to work with Starwood on options, the research provider noted.
Rents and other revenue from the three properties now are being put into a special account that can be used to pay down the loan, Trepp said. That process is called a lockbox activation.
These steps indicate that there is a possibility of a foreclosure on the three properties, but other options are available including a loan modification, said Jyoti Yadav, a research analyst for Trepp.
“Generally, these things take time to work out,” Yadav said. “Both the special servicer and the borrower assess their options and the end result can be a loan modification or the beginning of a foreclosure process. But these things are fluid.”
The loan was originally due in November 2017, but Starwood sought and received a two-year extension.
Stony Point remains open, Starwood officials said Tuesday.
“We are actively working to extend and restructure our financing at Stony Point Fashion Park,” Starwood said a statement. “In the interim, it is business as usual at the property.”
An affiliate of private equity firm Starwood Capital Group acquired Stony Point and six other shopping centers, including MacArthur Center in downtown Norfolk, for $1.403 billion in October 2014 from Michigan-based Taubman Centers Inc.
Starwood took out two loans to pay for part of the deal.
One loan portfolio used three malls for collateral — Stony Point; The Shops at Willow Bend in Plano, Texas; and Fairlane Town Center in Dearborn, Mich.
“Without knowing all the details about the other properties in the portfolio, it appears that this situation is emblematic of retail in general,” said Andrew Little, a partner and principal at real estate investment banking firm John B. Levy & Co. Inc. based in Henrico County.
“I really like what Starwood was trying to do at Stony Point and I hope they (or a new owner) are able to bring the necessary capital to allow the property to gain its full potential,” Little said. “My fear is that this default could lead to more tenant attrition and greater loss in cash flow and value.”
The other loan portfolio, for an original amount of $725 million, used four malls as collateral — MacArthur Center in Norfolk; Northlake Mall in Charlotte, N.C.; The Mall at Wellington Green in Wellington, Fla.; and The Mall at Partridge Creek in Clinton Township, Mich.
Starwood is in default on that loan as well, Trepp said. It owes $681.6 million and didn’t make a payment in November or December, Trepp noted.
That loan was transferred to a special servicer in November because of the balloon payment default, Trepp’s report said.
“Counsel has been engaged and all appropriate notices have been sent per the loan documents. A pre-negotiation letter has been executed with borrower and borrower rep,” the Trepp report said.
MacArthur Center mall has dealt with a loss of several tenants including anchor tenant Nordstrom, which closed its store there last April.
Stony Point, located off Chippenham Parkway in South Richmond, is a 668,000-square-foot mall that opened in September 2003, two weeks after crosstown rival Short Pump Town Center opened.
Stony Point’s anchor tenants are Saks Fifth Avenue, Dillard’s and CinéBistro dinner-and-movie theater. The 84,000-square-foot Dick’s Sporting Goods store closed in September 2018 and remains vacant.
Other tenants include Tiffany & Co., H&M, Anthropologie, Brooks Brothers, Vineyard Vines, Restoration Hardware and Sur La Table. Its restaurants include Brio Tuscan Grille, Fleming’s Prime Steakhouse & Wine Bar, P.F. Chang’s and Latitude Seafood Co.
But the mall lost some of its higher-brow tenants several years ago, including Louis Vuitton, Betsey Johnson, Hollister Co. and Build-a-Bear Workshop.
Net operating income at Stony Point, which is the amount of revenue earned after expenses are deducted, has dropped to $2.42 million in 2018 from $3.02 million in 2016, according to the Trepp report.
Total revenue, which includes rent and other income, fell to $9.16 million in 2018 from $9.65 million in 2016, the report showed.
Starwood had announced plans in 2015 for $50 million in phased renovations at Stony Point.
The first phase was completed in fall 2016, adding new seating areas, a new children’s play area, a dog park and a grassy open space that in the winter is converted into an ice skating rink.
But the planned future renovations — including plans for demolishing part of the buildings near Dillard’s and CinéBistro to create pedestrian cut-throughs to the parking lots — have never materialized.
The Starwood mall portfolio shows a solid debt-service coverage ratio based on net cash flow for the three malls, Little said.
The net cash flow in 2018 was $17.35 million and was $15.10 million for the first nine months of 2019, the Trepp report shows.
“It appears that most, if not all of the cash flow, has gone to pay down the debt,” he said.
The newest appraisal value of $345.2 million on the three malls, as of Dec. 15, also shows a low loan-to-value ratio even though the value is down significantly from the $411.4 million in April 2017, he said.
The balance on the Stony Point part of the overall loan is roughly $30.27 million, or 22.31% of the total amount due, the Trepp report shows.
The Shops at Willow Bend in suburban Dallas has the largest part of the balance — at $65.7 million, or 48.44%.
Superintendent Jason Kamras’ proposed budget for the 2020-21 school year includes a 3% raise for all Richmond Public Schools teachers and support staff. The budget asks the city of Richmond for about $21 million more, following last year’s $18 million increase.
The overall proposed increase of nearly $40 million would cover the raise and offset any increases to out-of-pocket benefit costs in addition to annual salary step increases that are already built in.
Gov. Ralph Northam’s proposed two-year state budget does not include a teacher raise until 2022, which means any RPS raises this year would come completely from school system funding.
The budget, which totals $329.7 million, would also fund the next year of the district’s five-year strategic plan. Highlights include adding a half-dozen new social workers, 12 Advanced Placement teachers, 10 English as a Second Language teachers, and 10 foreign language, art, music and physical education teachers.
Kenya Gibson, who represents the 3rd District on the School Board, said she thought district officials were recognizing what may have been an overcorrection last year.
“What I believe to be the headline of this discussion is that we cut too much last year and I’m thankful to see that we’re looking to correct that error in this upcoming budget,” Gibson said.
She said a noticeable drop in attendance this year came on the heels of cutting 20 attendance-related jobs from the central office last year.
Jonathan Young, the School Board’s 4th District representative, said the budget was a step in the wrong direction.
“If enacted, the superintendent’s budget proposal would reverse all of RPS’ gains from last year relative to fiscal constraint when the School Board cut $13 million from downtown,” Young said.
He said closing underutilized schools would be a good way to keep costs down for the district.
The district is requesting an additional $21.1 million from the city for next year’s budget to round out the nearly $19 million increase it is anticipating from the state and federal governments, assuming the governor’s budget passes as-is.
Kamras said several bills in the Virginia General Assembly could cause the amount of state funding to increase significantly. If Northam’s budget passes as-is, the school system would receive $17.6 million from the state.
“It is why advocacy is extremely important at the state level,” Kamras said. “If we can get that 17.6 [from the state] number up considerably, we have a shot at getting everything in this budget.”
The district’s Equity Fund, set up to target “high priority” schools where 60% or more of students are considered disadvantaged, would also increase to $1 million.
The district also corrected errors in counting English as a Second Language students that caused it to miss out on hundreds of thousands of state-level dollars last year.
The ESL population has more than tripled since the 2009-10 school year to nearly 3,200, and the new budget has a more than $1.6 million bump to ESL funding.
The board will continue to debate the budget over the next month, with regular workshops on Thursday nights and a public comment period at the regular meeting Feb. 3.
Kamras said that ideally, the board will be ready to approve the budget and submit it to Mayor Levar Stoney by Feb. 18. The budget will take effect July 1.
Last year, the city increased its funding for RPS by $18 million. Stoney originally wanted to raise the real estate tax rate to do so, but instead the city approved a cigarette tax to help pay for the boost. That budget eliminated 74 central office jobs and added 25, for a net loss of 49.
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The day after a gun-rights rally drew an estimated 22,000 people to the state Capitol, the state Senate debated one of the most controversial parts of Gov. Ralph Northam’s gun control package.
Senators on Tuesday disagreed on the merits of a proposed “red flag” law, which would allow removal of firearms via a legal warrant from a person deemed “a substantial risk of injury to himself or others” through what is called an “extreme risk protective order.”
Even with a new version of the bill — a substitute Sen. Scott Surovell, D-Fairfax, crafted to replace a measure that Sen. George Barker, D-Fairfax, proposed — Republicans criticized the idea.
“Here we go again,” said Sen. Bill Stanley, R-Franklin County. “This is another assault on the Bill of Rights.” He added later: “This is nothing more than an unlawful gun grab.”
Senate Democrats last week approved three parts of Northam’s eight-pronged gun control package. While the red flag law — a version of which is in place in 17 states — was backed by a Senate committee along with the others, debate on the bill, Senate Bill 240, was delayed in recent days as Democrats worked to amend the measure.
The new version, which senators subbed in Tuesday on a 21-19 vote, is meant to alleviate concerns over due process that Republicans raised in committee. It allows the person subject to the order to voluntarily turn over their guns, and creates an intervening step in which law enforcement must obtain a warrant before returning to search a person’s home for firearms. A final vote on the red flag law could come as soon as Wednesday.
“We’ve built so much due process into this thing — it’s a due process gem,” Surovell said.
Attendees criticized the proposed red flag law during Monday’s gun rally on Capitol Square, which drew protesters from across Virginia and the country.
“That is setting a precedent for allowing the government to take people’s personal possessions,” Eric Ollenberger of Newport News said at the rally.
The state of emergency Northam declared, which included a gun ban on Capitol Square, ended Tuesday.
Also on Wednesday, the Senate Judiciary Committee, the same panel that backed the first four Northam gun proposals, is set to take up bills related to lost and stolen guns, penalizing adults for allowing children access to guns, and disarming people subject to protection orders.
Earlier Tuesday, Democrats in a House panel defeated a batch of Republican gun-rights bills.
The subcommittee of the House Public Safety Committee had been known for swiftly killing gun control bills Democrats introduced when the House was under Republican control. On Tuesday, newly empowered Democrats turned the tables.
“It’s an honor to be the first to go down for the cause,” Del. Chris Head, R-Botetourt, said as he walked out of a meeting room after Democrats killed his bills.
Head sponsored two bills aimed at helping people who are hunting on property that spans multiple localities that have different firearm ordinances.
Within about two hours, Democrats defeated 11 bills, including one that would have increased the mandatory minimum sentences for use or display of a firearm when committing certain felonies. Another would have repealed a longtime law that makes it a misdemeanor to carry a weapon in a place of religious worship.
“We’re going to go beyond thoughts and prayers,” said Del. Jeff Bourne, D-Richmond, chairman of the subcommittee. “We’re going to give voters laws that will make Virginia safer.”
Del. Carrie Coyner, R-Chesterfield, broke ranks to vote with Democrats against two measures sponsored by Del. John McGuire, R-Goochland. One measure would have allowed any Virginian who is eligible to own firearms to carry a concealed weapon without a permit. The other would have provided that the state or localities waive their protection from lawsuits if they create gun-free zones.
On the House floor Tuesday, Minority Leader Todd Gilbert, R-Shenandoah, decried Democratic votes in the subcommittee, particularly on the measure sponsored by Del. Charles Poindexter, R-Franklin County, that would have increased the mandatory minimum sentences for the use of a gun in certain felonies. Gilbert said Democrats’ calls for stopping gun violence “ring hollow” because Democrats are pushing measures that are hurting law-abiding people.
“I wonder if, truly, stopping gun violence is the objective of the bills now pending before the legislature if we’re going to kill bills that actually do just that,” Gilbert said.
Del. Chris Hurst, D-Montgomery, said, “It’s not the thousands of armed and masked men outside the Capitol we should be paying attention to to assess the mandate of the voting public.”
He said the November legislative elections — in which more than 2.3 million Virginians voted and Democrats gained majorities in the House and Senate — reflected “the true will of the people.”
A proposal to nix a state holiday that honors two Virginia-born Confederate generals and add Election Day as a state holiday has cleared the Virginia Senate.
Senators voted along party lines on Tuesday to scrap Lee-Jackson Day, which falls on the Friday before Martin Luther King Jr. Day, and replace it with Election Day. The bill now heads to the House of Delegates.
“It’s a very good day for the commonwealth of Virginia, for moving Virginia forward in helping to bring us all together,” Lt. Gov. Justin Fairfax said in an interview.
Fairfax, a Democrat who is the second African American to serve as lieutenant governor, stepped off the dais in 2018 and 2019 when Republicans moved to adjourn in memory of Confederate Gen. Thomas Jonathan “Stonewall” Jackson. There was no need for his “silent protest” this year because the Senate did not adjourn in Jackson’s memory on the day bearing his name, which was Friday.
The Senate on Tuesday approved Senate Bill 601 from Sen. Louise Lucas, D-Portsmouth, in a 21-19 vote.
“It’s tremendous progress in a short period of time,” Fairfax said.
Before the vote, Lucas said the change would make it easier for people to vote.
“Many Virginians experience barriers to getting to the polls on Election Day, and there are usually long lines at the polls in the early morning and before the polls close,” she said.
Virginia has marked a state holiday for Lee’s birthday since 1889. It added Jackson to the Lee holiday in the early 1900s. In the mid-1980s, the state began marking the federal holiday for the slain civil rights leader on the same day, as Lee-Jackson-King Day.
In 2000, Gov. Jim Gilmore, a Republican, called for splitting them into separate holidays.
Sen. Siobhan Dunnavant, R-Henrico, was initially the lone Republican to support the measure but changed her vote.
“I was moved by [Sen. Mark Peake, R-Lynchburg] saying we need to add to history,” she said. “I know it was a vote that didn’t sway the numbers, but I think that it was a vote in favor of preserving our history.”
Before the vote, Peake spoke about not erasing history.
“We can promote everyone. We can promote diversity,” he said. “We can add things without taking away or tearing down other things.”
A similar conversation is happening with the state’s Confederate monuments. Legislators are weighing whether to give localities the authority to take down the monuments, many of which were raised decades after the Civil War.
Sen. Mamie Locke, D-Hampton, has made the proposal in the Senate. The bill has been referred to the chamber’s local government committee.
On Jan. 6, the Richmond City Council voted to ask the state for authority to decide the fate of its Confederate iconography. Five Confederate monuments were unveiled on Monument Avenue between 1890 and 1929. Four of the five are on city property. The Lee statue on Monument Avenue is on state property and would not be affected.
Virginia’s 110 Confederate monuments are the second-most of any state, trailing only Georgia’s 114, according to a 2019 study by the Southern Poverty Law Center.
Meredith Spies stood in front of legislators Tuesday and urged the General Assembly to take action on a bill she thinks could have helped save her mother.
Karen Giles was driving her Honda Accord in Chesterfield County last February when a dump truck crossed into oncoming traffic and hit her head-on. Giles, a volunteer firefighter and EMT, was pronounced dead at the scene.
Police charged the driver, Samuel M. Allebaugh II, with involuntary manslaughter. An investigation indicated that he was texting just before the crash, authorities said.
“It’s your right to use your phone, but it wasn’t this man’s right to take my mother’s life,” Spies said Tuesday. “It is not worth it. We need to put our phones down.”
As Spies talked, Christina Dempsey, who lost three family members in 2013 when a truck driver took his eyes off the road to check directions, held a portrait of Giles. Melanie Clark, whose husband, a Hanover County firefighter, was struck and killed by a tractor-trailer in 2018, held a frame of Giles’ EMT and firefighter patches.
Still grieving, the family members all hope the General Assembly will ban drivers from holding a phone while driving. Virginia’s legislature came close to passing the bill last year, but a conference committee killed it.
“How many more lives have to be lost?” Dempsey said.
Del. Jeff Bourne, D-Richmond, the bill’s patron, said it’s likely to meet a different fate this year.
“I believe this year we will get it across the finish line,” he said.
Omnibus transportation bills that House Speaker Eileen Filler-Corn, D-Fairfax, and Senate Majority Leader Dick Saslaw, D-Fairfax, introduced for Gov. Ralph Northam also would prohibit hand-held cellphones for drivers.
Texting while driving increases the likelihood of a crash by as much as 23 times, according to the Virginia Tech Transportation Institute.
Twenty states ban drivers from using hand-held phones while driving, according to the National Conference of State Legislatures.
While current state law bars drivers from texting or entering numbers on a phone while driving, it’s “unenforceable,” said one state senator, because the law also lets drivers scroll through Facebook or play games, among other things.
“It’s completely out of control,” said Sen. Scott Surovell, D-Fairfax. “We need to do something about it before more people are killed.”
Bourne’s bill includes a $125 fine for a first offense and a $250 fine for subsequent violations or violations in a highway work zone.
In December, the Richmond City Council unanimously passed a measure similar to Bourne’s proposal.
“I’m proud that the city of Richmond led the way by passing a municipal phone ban, but it’s time to take this issue statewide,” Bourne said.
Richmond Police Chief William Smith said Tuesday that Richmond’s ban will still take effect in June even if the legislature does not approve Bourne’s bill.