Fashion Square Mall under foreclosure after lender claims $42 million loan default

ORLANDO, Fla. — Foreclosure proceedings were initiated against Fashion Square Mall on East Colonial Drive this week after a lender claimed the facility’s owners defaulted on a nearly $42 million loan.

Bancorp Bank filed a foreclosure complaint in Orlando federal court Tuesday claiming that UP Development failed to make loan payments in July, August and September, totaling more than $400,000.

Additionally, the filing claims 2015 property taxes of more than $923,000 had not been paid for Fashion Square Mall, causing a lien to be placed on the property.

UP Development announced plans in 2013 to transform the 44-year-old mall and bring a seven-story hotel to the mall.

The developer said there’s uncertainty over the future of Macy’s and Sears. Sears closed late last year. The developer said they can’t proceed without a clear picture of what’s next for those stores which are located near the proposed hotel.

“A mall by its very definition is very interconnected and organic. The pieces have to work together and be planned together,” said Frank Herring, with UP Development.

UP Development has already invested about $20 million in improvements, store relocations and the addition of the Dick's Sporting Goods, among other things.

The Bancorp Bank foreclosure was filed hours before the Eatonville Town Council voted unanimously to accept a bid by UP Development to build homes, shops and offices on a 100-acre tract of land.

The land is along Wymore Road, where the historic Robert Hungerford Vocational High School is located.

It is owned by the Orange County School Board and the Town Council plans to finalize plans for the development by the end of the month.

The Bancorp Bank filing seeks the balance of the loan, interest and attorneys’ fees.

In a statement UP Development said:

"UP Development, LLC is a separate and distinct entity from UP Fieldgate US Investments-Fashion Square LLC (“UP Fieldgate”), the owner of the Fashion Square Mall and the lawsuit filed by The Bancorp.

The allegations released are not an accurate reflection of the issues involved.  UP Fieldgate contends that it is, in fact, Bancorp that has defaulted on its obligations and breached our contract and we will litigate this suit accordingly.

UP Fieldgate is committed to Fashion Square Mall and intends to continue its redevelopment.  UP Fieldgate has made substantial investments to improve, upgrade and expand the mall since its purchase in 2013, and we are proud of what we have been able to achieve for the community, working with the existing and new tenants.  The mall remains open and is conducting business as usual.

Likewise, UP Development, LLC, continues to invest in Orlando and Central Florida, delivering on development projects of community interest and strong economic value, including the newly open Whole Foods center in Winter Park and a recent acquisition and pending development at Millenia.

The Town of Eatonville is our most recent project, and UP Development is proud to have been chosen as the Town's partner for such a historic venture.  We are financially secure and fully committed to working side by side with the Town Council and residents of Eatonville to realize their vision."

Cox Media Group