Gateway center developer wants to sell notes to investor, avoid foreclosure
Developer Carlton Jones said this morning that he is working with a real estate investor who he expects could buy the notes on the Gateway Town Center in North Jacksonville by March 1.
If that happens, Jones expects a foreclosure action on the property would be withdrawn.
“I am confident our group will close on or before March 1,” Jones said in a telephone interview.
In the meantime, Jones said the center, at 5238 Norwood Ave., is operating as usual.
“All the leases are in place,” said Jones. He said the center is about 65 percent leased with more leases pending.
A foreclosure suit was filed Feb. 9 in Duval County Circuit Court against the owner of the Gateway, according to county records.
Gateway Retail Center LLC, a partnership that has a Miami Beach address, filed the suit against Gateway Center Economic Development Partnership Ltd. and several other parties.
Jones said he spoke with the lender. “If I close on March 1, they will withdraw,” he said of the foreclosure.
He did not identify the potential new investor. “They are a private investment fund and they have the resources,” he said.
Gateway Retail Center LLC filed a lis pendens – a notice of pending litigation – against plaintiffs Gateway Center Economic Development Partnership Ltd., Colbyco Enterprises Inc., Renaissance Design Build Group of Duval County Inc., Carlton D. Jones, Cal Development Inc., War on Poverty-Florida Inc., Gateway to Heaven Christian Center Inc., Colbyco Realty Inc., Wilson & Company Inc., the City of Jacksonville “and all others whom it may concern.”
Jones is an officer in many of the companies listed.
Records show the property, consisting of 14 buildings, carries a 2011 taxable value of $11.8 million. Gateway consists of about 56 acres.
Jones said he learned that Wells Fargo, which acquired the note when it merged with Wachovia, sold the note on the property near the end of the year to Gateway Retail Center LLC.
Gateway Retail Center LLC was registered with the state Division of Corporations in October.
Jones said Rialto Capital Advisors signed the documents for the foreclosure and that Rialto is part of Lennar.
“They buy notes and they are developers,” he said.
“They had a relationship with Wells Fargo.”
He said the conversations with Rialto “have been cordial.”
Meanwhile, one tenant, Duval County Supervisor of Elections Jerry Holland, said this morning that he did not know the landlord’s intentions. Holland said he “never anticipated” the current predicament and that there are potential short- and long-term ramifications.
“At this point, we just don’t know,” he said.
Short-term, it’s a presidential election year and Holland said he was not in a position to assume that the office will not be evicted before the fall elections. He said the Gateway facility houses necessary personnel and machinery, and that includes a mailing apparatus that costs $35,000 to move, tabulating machines, training rooms and a 70-person call center.
“We need to have a Plan B,” he said.
Such a plan could be decided by the mayor’s office.
Holland said he will see what the administration thinks about the situation, although he said he met with the administration last week to discuss potential long-term plans to relocate the Gateway office.
Holland said the administration rejected an idea to move to a building at 6400 Atlantic Blvd., which he said could save taxpayers $200,000-$300,000. He said the City’s real estate office has reviewed more than 30 possible locations, including Downtown in The Armory building at 851 Market St., but it was not cost-feasible.
A City ordinance passed in June kept the office in its current Gateway location for six months, with a month-to-month option held by the City after the lease expires in March.
Jones said Gateway has a lot of potential, including with a medical clinic that completed a more than $3 million build-out there.
The other tenants within the enclosed mall portion have moved into a Gateway strip shopping center or into the perimeter of the mall, he said.
“This new lender will spend money to build out a new medical pavilion,” he said.
Jones said also that the center is negotiating with a tenant for 25,000 square feet of space.
“I look at this very positively,” he said. “I am committed to Gateway.”
One of the newest tenants is Hibbett Sports, which Gateway Operations Director Chris Jones said signed a 10-year lease for 5,000 square feet of space.
In May, the Marcus & Millichap National Retail Group listed Gateway Town Center for sale at $23 million. The listing showed Gateway, just off Interstate 95 along Norwood Avenue, with 560,352 square feet of leasable space on 56 acres. It said the center, built in 1967 and renovated in 2005, is anchored by Publix, RadioShack and Family Dollar.
Jones said the Rialto group was interested in the property at the time.