Shoppers stroll through the north end of the Centralia Factory Outlet Stores.
By Sharyn L. Decker
Lewis County Sirens news reporter
CHEHALIS – A judge signed an order today to put the Centralia Factory Outlet Stores into the hands of a receiver as the bank holding a $30.7 million note has commenced foreclosure.
Spokane-based Sterling Savings Bank filed a petition two weeks ago in Lewis County Superior Court alleging the Centralia Outlets are in default on a loan made in early 2007 for extensive renovations at the mall.
Centralia Outlets have some 30 tenants in the mall which covers areas on both sides of Interstate 5 near the Harrison Avenue interchange.
Centralia Outlets LLC argued it is not in default and has complied with requirements to extend the date of a balloon payment until next March. Attorneys wrote in a response filed Wednesday the Centralia Outlets are profitably operated.
The principals of Centralia Outlets LLC are listed s Richard K. Getty and Jerry R. Barnett in Tacoma.
The asset manager for the two men wrote in opposition to the petition, “It’s not a secret the bank was in danger of being shut down.”
“It’s clear that their decision to call this loan in default by stretching and distorting the meaning of the two sections of the loan document was based solely on their need for cash,” Sandra Smith wrote.
Lewis County Superior Court Judge James Lawler today sided with the bank signing an order saying the note and deed of trust are in default, and the property and the rents it generates are in danger of being lost or materially injured or impaired.
John P. Rader was appointed a general receiver at the request of Sterling Savings. A receiver is a person appointed as the court’s agent to take possession of, manage or dispose of property.
As of Nov. 2, according to the bank’s filing, more than $24 million was owed on the note.
Part of the default occurred, according to lawyers for Sterling Savings, when the principals transferred their membership interest in violation of restrictions on the loan. Attorneys for Centralia Outlets LLC wrote in response they assigned their member units to family LLCs for estate planning purposes, something they did two years ago.
They had asked Lawler for a 30-day continuance but it was not granted.
Centralia Outlets opened in 1988, becoming the first outlet shopping center in the Pacific Northwest, according to their property manager Renate Johnson.
In the past three years, they have added tenants such as Polo Ralph Lauren, Aeropostale, Billabong, Coach and just this autumn, Toys R Us Express.
Negotiations are underway with several more for spring and summer openings, according to Centralia Outlets LLC.
Centralia Outlets was ordered to deliver all its property to the receiver when he posts a $250,000 bond, which is to be done within seven court days.
A judge signed an order to put the Centralia Factory Outlet Stores into the hands of a receiver on Friday as the bank holding a $30.7 million note has commenced foreclosure.
Tags: By Sharyn L. Decker, news reporter