BayWalk's owner is in default on his mortgage loan and anticipates that foreclosure will follow for the downtown St. Petersburg entertainment complex.
"My indication is that they are in fact going to file a foreclosure, and we have no intention of fighting them," local developer and complex owner Fred Bullard Jr. said late Thursday.
Bullard had pledged to invest heavily in renovations and improvements but now is ready to walk away. "We're not going to throw good money after bad," he said.
That spells trouble for tenants of the struggling complex who were counting on a major overhaul. Once viewed as a spark plug for downtown retail, BayWalk had trouble shaking a reputation as a hangout for rowdy teens. The vacancy rate stood at 25 percent in the summer.
"It's been mismanaged for years," said Bruce Rabon, who owns two clothing stores and has rented space since BayWalk opened in 2000. He hopes the foreclosure will lead to new, more effective management.
"To me, that center has nothing but 'win' written all over it," he said. "People should be clamoring to have a retail space in there."
The mortgage showdown stems from September when Bullard secured controlling interest in the site from partner and project developer Sembler Co. Terms weren't disclosed for the deal, which added Sembler's 50 percent managing partner interest to the 50 percent Bullard already held.
Bullard said that, before the sale, he had talked with mortgage holder Wachovia Corp., which "indicated a willingness to try to work through the difficulty of BayWalk and allow us some time to see where we were and what we needed."
Bullard said he was shocked to learn the deal triggered a violation of the partners' loan agreement, prompting Wachovia to demand payment of the $17-million mortgage in full. Wachovia spokeswoman Kathy Harrison declined to comment Thursday, saying privacy policies prevented the bank from disclosing information about customers.
"No one (else) would refinance it in today's environment," Bullard said. "We were kind of stuck with the existing lender and hoped we would work our way through."
Wachovia subsequently transferred the loan to a trustee in Dallas, but negotiations were stagnant. Bullard refused to make monthly payments of about $120,000 on the loan.
"We are a little bit puzzled as to why they wouldn't cooperate and help us get this project back on its feet," he said. "We had been prepared to invest in the property and pay all its negative cash flow."
At a standstill, Bullard sent a letter to the trustee earlier this month. "I said, 'We're not going to throw good money after bad. And if you think you can run it better than us, that's fine with me. You can have it.' … All of the tenants are having an enormous amount of problems. We don't really know if we can rejuvenate it or not."
He hasn't heard back yet.
BayWalk opened in November 2000 at a price tag of $50-million. Including the garage, BayWalk boasts 130,000 square feet of retail space plus a movie theater owned by Muvico Theaters LLC.
Sembler tried unsuccessfully to find a buyer before Bullard stepped in. Long active in the bay area, Bullard may be best known for developing Feather Sound, formerly running Durango Steak House and owning the former USFL Jacksonville Bulls pro football franchise.
City officials were enthused when Bullard took full control, anticipating a reinvigoration. The city doesn't have a financial stake in the retail complex but owns the BayWalk parking garage.
BayWalk's plaza was almost silent Thursday except for faint music from the upstairs restaurants and the ringing of the Salvation Army bell. A few customers strolled through the center, but shopkeepers looked bored until closing time.
Several prominent spaces, including the two bottom-story shops flanking Muvico, had "For Lease" signs hanging in the window. The upper level dining sign advertised four restaurants and "Another Fine Tenant Coming to BayWalk."
Trade Secret manager Nikki Lyon said she hadn't heard about the foreclosure.
"To be honest, it's not really surprising," she said. "It's been so slow. Things have been closing right and left."
Times staff writers Cristina Silva and Ernest Hooper contributed to this report. Jeff Harrington can be reached at (727) 893-8242 or firstname.lastname@example.org.