By Shereen Siewert
WAUSAU — The Wausau Center mall is on a list of properties to be auctioned in July by the Marathon County Sheriff.
An order for foreclosure was filed June 5, according to Marathon County Circuit Court documents. The sheriff auction, which is a public auction of property repossessed by a mortgage lender, is set for July 11.
Economic Development Director Chris Schock has issued statements to several news outlets calling the series of events “routine” and a way for the company that is now overseeing the mall to take ownership. Schock has not answered a request for comment from Wausau Pilot & Review, which broke this story early Thursday.
Foreclosure cases are often settled before being listed for auction if a new buyer is in place.
Financial experts and attorneys say the issue is complex because the city owns the ground underneath the mall and the air above the property. The mall owners then pay a ground lease to Wausau and have various obligations to keep the city informed or get the city’s permission to make any changes.
But Wausau Mayor Rob Mielke said he was surprised by the news.
“This is the first I’ve heard of it,” Mielke told Wausau Pilot & Review early Thursday.
The foreclosure order, signed by Circuit Judge Greg Huber, states that the premises cannot be sold in parcels but will be sold at public auction under the direction of the Marathon County Sheriff at a “time and manner provided by law.” The lender is free to bid on the property at auction but is not required to do so. Other bidders could also come forward.
If the lender does not win the auction, all proceeds from the sale will be applied to the amount due the lender, according to the order. As of May 30, the total amount due was listed as $18,922,717 including principal, interest, default interest and late penalties. Additional penalties are accruing daily.
Updated, 4:42 p.m.
The foreclosure could be the latest blow to redevelopment plans for the troubled mall, which has been in decline for years. When Wausau Center opened in 1983, the mall was a bustling 424,000 square-foot regional center with three anchor tenants: J.C. Penney, Sears, and Prange’s, which evolved into Younkers. Of those three, only Younkers remains today.
But consumption patterns have moved away from the business models of J.C. Penney and Sears and gravitated toward alternatives. CBL & Associates Properties, the former owner of Wausau Center, said they spent significant time and resources over a two-year period to revitalize the mall, but delays, city approval and other red tape hindered their progress.
As a result, Tennessee-based CBL Associates turned its nearly $18 million mortgage back to the bank, essentially walking away from the property. Court documents indicate Wells Fargo Bank initially issued the loan but the plaintiff in the case, the current lender, was changed in April to Deutsche Bank.
When CBL defaulted on the loan, Rialto Capital Management of Miami hired Mid-America Real Estate Group of Milwaukee to take over the mall. Last summer, Economic Development Director Chris Schock positioned the move as good for Wausau. In August, Schock told reporters and council members that the investors who held the debt on the mall had no plans to sell, but intended to invest more into the shopping center.
Mid-America Real Estate Group does not list Wausau Center among the group’s managed properties.
This story will be updated.