New businesses continue to open at The Source, a Buena Park hub with an assortment of restaurants, shops and a movie theater, even as its developers scramble to refinance millions of debt and avoid a sale. trustee scheduled for May 23.
After a slow start, nearly 30 stores, restaurants and entertainment venues have opened since late 2016, including a bar with virtual golf cages and batting cages which launched on May 3. But, according to notices filed with the Orange County Registrar’s Office, the center defaulted last fall on debts totaling nearly $ 130 million.
A fiduciary sale – essentially a foreclosure process that doesn’t involve a judge – was scheduled for Wednesday, May 16, but was postponed for a week, according to John Zheng, the contact for lender Beach Orangethorpe LLC. A foreclosure expert said it was common practice to postpone such sales so that the indebted party could make a deal with a lender.
Donald Chae, CEO of developer M + D Properties, did not respond to emails or phone messages seeking comment. Company spokesperson Katie Wanamaker provided an emailed statement that the company is negotiating with lenders.
“Although the parties have not yet reached an agreement, we are optimistic that they will do so in the coming weeks,” the statement said. “La Source remains open and is happy to serve the local community. “
Wanamaker declined to comment further before a deal is reached.
More stores to come
Originally offered nearly a decade ago, the $ 325 million entertainment hub has been stranded by the recession and changes in the retail market that have kept it from finding a large store. anchor, said Buena Park community development director Joel Rosen. It was considered the Mecca of Korean culture and was at one point in talks with YG Entertainment, the company that manages Korean musical artist Psy, famous for “Gangnam Style.”
Today, The Source has over a dozen restaurants, including coffee and tea shops, Korean ramen and barbecue restaurants, and an upscale Mexican restaurant. Italian restaurants and a food court of popular South Korean restaurants are advertised as “coming soon.”
A handful of clothing and makeup stores and others selling jewelry and shoes also dot the center, suggesting the feeling of a multi-story indoor mall despite not being closed. All three levels overlook an open courtyard where events take place. Several walls are painted with colorful street art-style murals.
On a recent Friday afternoon, a few dozen patrons were chatting over coffee, walking back and forth to CGV cinemas – it’s home to the county’s first 4-D cinema – and browsing menus in restaurant windows. A half-dozen future storefronts were in various stages of preparation, some with only a sign with the name of the future tenant, others full of workers busy setting up shelves.
“At night it gets more crowded,” said Viri Morales, 21, of Cypress, who was sitting outside a cafe with a friend.
“It would probably be nice if there were more stores open,” she said, but it would mean more traffic and more difficulty finding parking.
While it’s not as busy during the week, The Source sees a lot of customers on the weekends, said Amanda Gonzales, who runs a Jamba Juice that opened earlier this month.
A Hilton hotel is expected to open in January, she said, and a gym is expected to rent one of the empty spaces nearby, which should help its sales.
Tim Lo, general manager of Olympic Golf Zone, had no customers playing virtual golf or using his batting cages on a recent weekday afternoon, but said the previous weekend had been very successful. Like Gonzales, he’s optimistic about rumors of new businesses, including a computer game room he says will open across from his restaurant and bar.
Lo said that he and his uncle, owner of the Korea-based company, chose The Source for their first location in the United States because although they cater to all kinds of clients, “we have noticed that ‘There were a lot of Korean customers here at Buena Park’.
To sell or not to sell?
Rosen of Buena Park said the owner of The Source has tenants lined up, but needs to sign more leases to reach a 70% threshold to put long-term financing in place. Based on what she was told, Rosen said, “I think they’ll find a way to restructure their debt or take some other legal action” to avoid a sale by a trustee.
Zheng, with lender Beach Orangethorpe LLC, said when contacted on May 3 that he is still speaking with all parties involved.
Sean O’Toole, of foreclosure research firm PropertyRadar, said that when it comes to commercial properties it is “quite rare that they are actually put up for sale by a trustee.”
Banks don’t want to be responsible for commercial properties, in part to avoid future legal liability, he said, so they “will do a lot to work with the owner of the business, the entity, the developer, whatever. that it is, to solve without taking this step. A sale can be scheduled and then postponed because entering a date “tends to move negotiations forward faster.”
Last year, the developer hired a Korean accounting firm to try to find a buyer for The Source who would then re-let it to M + D Properties to manage, according to a filing filed in March by M + D.
Since The Source was funded in part through the federal EB-5 program, or Immigrant Investor Program, several hundred foreign investors have financial ties to the project.
Through this program, 340 foreign nationals each invested $ 500,000 in The Source in exchange for green cards to come to the United States. Each investment is supposed to create at least 10 jobs. The Source as a whole was initially expected to create 3,700 jobs, including construction and operations.
It’s unclear how many jobs the project has created to date and what might happen to investors if a fiduciary sale continues. The U.S. Customs and Immigration Service requires annual reports on EB-5 projects, but does not disclose details due to privacy laws, agency spokeswoman Claire Nicholson wrote in an e -mail.
Rosen has said he expects The Source to prosper eventually. The city initially subsidized the project by giving the developer several acres of land and promising to repay nearly $ 50 million in future tax revenues.
The city recently approved the developer’s concept plans for an adjacent mixed-use building with 250 condominiums, and the entertainment center continues to add new businesses, Rosen said, adding: “It’s much slower than expected.” .