ORLANDO, Fla. — As part of a $42 million loan default foreclosure filing, Bancorp Bank has accused the owners of Fashion Square Mall of overstating income and claiming “extraordinary” expenses on financial documents.
In a motion demanding all rents from Fashion Square Mall be delivered directly to Bancorp, the company questions the reports it has received from the facility’s owners.
Bancorp initiated foreclosure proceedings in Orlando this week saying mortgage payments of more than $400,000 were owed on a $42 million loan, according to court documents.
The filing also claims the owners of Fashion Square Mall have a delinquent property tax bill of more than $900,000, which has caused a lien to be placed on the property.
Pointing to entries on a financial report for January through June, Bancorp questions a $1.28 million entry for “Payroll Revenue Income” and $138,000 entry for “Ext Landscape Revenue.”
“(The amount) appears to be some mechanism to overstate income,” the lawsuit alleges.
Based on numbers from the first six months of the year, Bancorp calculated that for all of 2016 “Office/Mgmt-Contract Services” and “Office Payroll Expense” would be “extraordinary, above-market amounts” at nearly $900,000 and $600,000 respectively, the suit said.
The mall’s owners have “grossly mismanaged the Shopping Center … incurring expenses and paying companies (they) control to manage and provide security, janitorial and landscaping services,” Bancorp claimed.
The payments for those services were “in amounts that are beyond that which is appropriate for similarly situated shopping centers,” the lawsuit said.
The bank is demanding Fashion Square Mall’s owners pay the outstanding property tax, make its loan payments and provide Bancorp detailed income and expense reports.
The lawsuit also points out that Fashion Square Mall’s owners owe more on the property than it is worth.
The Bancorp Bank foreclosure filed Tuesday came hours before the Eatonville Town Council voted unanimously to accept a bid by the mall's parent company, 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.
In a statement, UP Development responded to the foreclosure filing:
"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