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Boulevard Mall owner defaults on loan; could mean foreclosure

The owner of the Boulevard Mall in Amherst defaulted on the $92 million loan payment it was required to make last week, according to a report from the commercial mortgage data research firm Trepp LLC.

Cleveland-based Forest City, as expected, did not make the payment that is far higher than the value the company has assigned to the region's oldest enclosed shopping center, Trepp said in a report that is based on industry data it tracks and analyzes.

LNR Partners, the Miami-based special servicer that is handling the loan, now must decide its next step. The company is likely to begin foreclosure proceedings, experts said, although it could continue negotiations with Forest City over a payment plan.

Foreclosure would play out in State Supreme Court's commercial division, typically overseen by a court-appointed receiver, said Peter Allen Weinmann, a partner with the Wolfgang & Weinmann law firm who is not involved in the Boulevard Mall situation.

"I guess they're getting their ducks in a row before the legal filing," Weinmann said of LNR.

It's a lengthy process and one that isn't likely to affect day-to-day operations at the mall, he said.

"Especially with a monster project like the Boulevard Mall, which is still a revenue-producing entity," said Weinmann.

Boulevard Mall, Buffalo’s oldest enclosed mall, put up for sale

Forest City owes $91.7 million on the loan and last made a payment on Jan. 6, according to the Trepp report. A balloon payment on the loan was due Feb. 6. LNR Partners said in a commentary included in the Trepp report that it was preparing to foreclose on the loan but continuing to talk to Forest City.

David Hartley and his daughter Alyssa, 13, of Amherst, shop at Boulevard Mall on Niagara Falls Boulevard. (Robert Kirkham/Buffalo News)

Jeff Linton, a Forest City spokesman, didn't address questions about the missed deadline and the foreclosure proceedings in a statement he issued.

"What I can tell you is that the mall is open and operating as usual and we are in discussions with the lender. Can’t comment further," Linton said in an email on Monday.

Boulevard Mall faces an uphill battle amid shifting trends in shopping

The Boulevard Mall, built in 1962, was 93 percent occupied as of June, according to Trepp, the most recent figures available. It has been hurt by the departures of retailers, and that occupancy rate will drop once anchor tenant Sears moves out this spring.

Forest City has cut the value it places on the mall property by 44 percent, to $65.6 million, according to a filing with federal regulators. The company in July filed a court challenge to the assessment on most of the parcels that make up the mall property.

And Forest City has listed the mall for sale since last summer, apparently with no takers yet.

"This ultimately comes down to finding a buyer," said Sean Barrie, a research analyst with Trepp, referring to any foreclosure filing.

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