Several potential buyers toured The Market Common last week and met with business owners, some of whom are trying to combine stores and are struggling after the property was put up for sale as part of the foreclosure process.
Those buyers will likely face some challenges as a recent report written by the complex's owner showed that about half of the businesses have requested or received reduced rents and several are in trouble.
An e-mail to tenants from staff at The Market Common who are employed by the receiver, Jones Lang LaSalle, asked managers to make sure that exteriors looked good and all lights were working for the visit.
"Hopefully, you will see an increase in business during the visits since some will be arriving from as far as Germany," the e-mail said. Sue Bonin, the general manager of The Market Common, would not comment, and further details about the potential buyers were not available.
On May 11, JPMorgan Chase Bank filed a foreclosure suit against LUK-MB1 LLC, the company that owns and developed The Market Common. The bank said LUK-MB1, which is owned by the Leucadia National Corp., stopped making payments on a construction loan and owes lenders more than $105 million. The loan was for more than 370,000 square feet of shops, almost 24,000 square feet of office space and 195 residential units that make up the core of The Market Common, which opened in Myrtle Beach in 2008.
The court appointed Jones Lang LaSalle, a commercial real estate services firm, as the receiver, and the company is responsible for running and marketing the shopping center during the foreclosure process.
"The receiver has prepared a marketing brochure and is shopping the facility around and is trying to find a buyer," said Bill Short, an attorney with Haynsworth Sinkler Boyd, who is representing JPMorgan Chase in the foreclosure. "There have been some inquiries. Those people have signed confidentiality agreements with the receiver."
Short said that there have been some on-site inspections, but he doesn't know who the potential buyers are. He said that the foreclosure hearing, where a special referee would authorize the property's sale, will not take place before October or November.
Short said that the receiver has the power to collect bids and to sell the property, but it's unlikely the property would be sold before the foreclosure auction. If a buyer is found, the lenders may give their right to bid to the buyer, who would then get the property at the foreclosure sale. The lenders would be willing to consider offers to purchase the property that don't cover the full amount owed, he said.
A quarterly report from LUK-MB1 about the property submitted to the Municap Inc., which administers the bond on The Market Common, reported that many businesses have requested and are paying reduced rents and that some businesses are struggling to stay afloat.
About 37 of the 55 businesses at The Market Common are on a "watch list." Those tenants have either requested rent relief, could get rent adjustments or have kick-out clauses that could be triggered if the companies don't fulfill certain requirements. Some are receiving financial assistance, are closing or owe money. LUK-MB1 wrote that it does not know how the watch list companies were determined because it no longer manages the property and the information came from the receiver.
One business, The Big Tuna gift shop, closed a few weeks ago because there wasn't enough business, said owner Lois Weatherford. "We just could not afford to stay open," she said. "What happened with Deville Street is they just simply did not incorporate it into the main section of The Market Common. There was no foot traffic."
Weatherford said that the owners had been generous in giving rent relief and that for several months she was only charged for the expenses, but that eventually even that was too much.
A store that focuses on local art should be successful, but without visitors or name recognition it just wasn't sustainable at the location, she said. She said she thinks the foreclosure also had an impact, mainly because it sounded bad and could have kept people away from the shopping center.
Another store along Deville Street, Bungalow Bailey's, also closed recently and has combined with Blue Mer, which is next door and shares the same owners.
Penny Vaigneur, the owner of Copper Penny and Copper Penny Shooz, said that she is also trying to combine her two stores at The Market Common.
"We would like to see that happen. I just don't think that there is enough traffic out there to support two stores that are owned by one company," she said. "Because the economy is in such a bad situation, we feel like we can do a much better job in one space than we can in two."
Vaigneur said that business has picked up a bit this summer and she is still confident in The Market Common.
"Our plans are to stay in one space and our hopes are that we will be successful. ... I just hope it continues to improve," she said.
Vaigneur said she doesn't know how a new owner for The Market Common might change how the center operates.
"Hopefully it will be someone who will understand the problems," she said.
The Divine Dining Group, which has three restaurants at The Market Common - Ultimate California Pizza, Divine Prime and Roy & Sids - is on the watch list, but Vice President and co-owner Nate Anderson said business has picked up this summer and the company isn't going anywhere.
"Traffic is up in the complex. It looks like when the economy starts to turn around it will fall into place and do well," he said.
Anderson said that Ultimate California Pizza is doing very well and Divine Prime is also holding its own. Roy & Sids, however, wasn't getting the amount of business the company wanted and will likely close in about a month, go through an overhaul in a matter of weeks and reopen as a new restaurant, Anderson said.
"We think a different type of concept will be more successful in that location," he said, but declined to give more details about the new restaurant because they are still being worked out.
As for the foreclosure and the potential for new owners, Anderson said he doesn't expect it to change the dynamic at The Market Common.
"I doubt it would make a whole lot of difference at this point. Hopefully it will bring in more tenants," he said.
Contact ADVA SALDINGER at 626-0317.