(Carl Cronan is editor of Real Estate Florida.)
ST. PETERSBURG, FL-BayWalk, a 130,000-square-foot retail and entertainment complex that was once considered a catalyst for reviving the city's central core, is now being seen as its biggest casualty in the ongoing real estate downturn. A foreclosure auction has been scheduled for Feb. 13, with Tampa-based Ciminelli Real Estate Services of Florida appointed as the property's receiver.
Wells Fargo & Co., which holds the $14.5-million mortgage on BayWalk, is expected to gain ownership of the asset during the auction, after which it will likely put it up for sale. Ciminelli principals Hunter Swearingen and Tom McGeachy are being limited from commenting on the pending auction.
BayWalk, which includes a variety of shops and restaurants along with a 20-screen Muvico theater, occupies at least a block of Downtown St. Petersburg at First Street and Second Avenue North. It opened in November 2000, with city leaders hoping that a new complex in a new century would help turn around St. Petersburg's image as a creaking retirement haven.
It appeared to work for a while, with numerous new restaurants, bars and music venues opening along historic Central Avenue in recent years and as an attraction for baseball fans before and after games at nearby Tropicana Field, home field of the Tampa Bay Rays. But it also attracted another unwanted element--local youths who regularly clashed with security forces and police, leading to negative news reports and rampant rumors.
The Sembler Co., a St. Petersburg-based retail developer that partnered with local entrepreneur Fred Bullard on BayWalk, sold its 50% interest for an undisclosed price on Aug. 31, 2008, making Bullard the property's sole owner. Even at that point, Bullard sensed trouble on the horizon.
"BayWalk was really a victim of its own success," Bullard told the Tampa Bay Business Journal last fall. "By attracting people to Downtown St. Pete, it got a lot of competition."
As the lingering recession led to closings of some of BayWalk's original tenants, lowering occupancy to around 80%, Wachovia Bank (now part of Wells Fargo) demanded repayment of its mortgage in November. A Pinellas County circuit court judge put the property in foreclosure Jan. 13, appointing Commercial Properties Specialists in Clearwater as receiver.
In a strange twist, CPS president Howard Rosenthal was arrested two days later on a charge of felony grand theft related to the alleged misappropriation of $171,000 belonging to his former employer, Clearwater-based Colliers Arnold. Rosenthal maintains his innocence, but receivership of BayWalk was transferred to Ciminelli anyway.
The value of BayWalk has eroded over the past seven years, from its original $50-million development price tag to its most recent appraisal of $12 million. Yet St. Petersburg city officials and other local retail observers point out that the complex is in a prime location and could be in position for a huge comeback, depending on new ownership and economic conditions.
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