A portion of developer Alan Kahn’s Village at Sandhill shopping complex in northeast Richland County has been foreclosed, and the property is scheduled for public auction on Sept. 6.
The foreclosed property, which is known as VAS Marketplace, includes a Bi-Lo Superstore, several small retailers and banks and a children’s gym. About $15 million is owed on the property, which is slated to be sold to the highest bidder at the request of the lender, according to court documents.
The legal action does not mean Bi-Lo and the other businesses are in default or that they will close. Rather, the court documents allege that money is owed on the buildings that house the businesses.
U.S. Bank National Association, acting as a trustee for Morgan Stanley Mortgage Capital Inc., filed the foreclosure request against Kahn in March, and the state court issued the foreclosure order in early August.
Kahn and his company, Kahn Development Co., opened the 640,000-square-foot Village at Sandhill shopping, recreational and living complex in northeast Richland County in 2002.
According to the court papers, Kahn, who overcame significant opposition before gaining local support to open the complex, borrowed $15 million from Morgan Stanley Mortgage Capital for the VAS Marketplace properties on Aug. 31, 2005, with a maturity date of Sept. 1, 2015.
Kahn, 74, failed to pay that debt on or before the due date, the court papers said.
Kahn has had other financial difficulties with some of his business ventures. In 2013, he filed for Chapter 11 bankruptcy against $100 million of debt owed to more than 50 creditors. Ultimately, Kahn was ordered to repay less than 5 cents on each dollar he owed his creditors.
In 2014, another portion of his Village at Sandhill property was foreclosed upon, including the VAS Marketplace II retail center, the VAS Condominiums and another undeveloped parcel, all on the west side of the sprawling, 300-acre complex.
Neither Kahn nor his attorney, Geoff Levy, could be reached about the latest foreclosure on Tuesday.
In this month’s court order, Master in Equity Joseph M. Strickland concluded Kahn owed $14.6 million on the VAS Marketplace property as of July 20. The bill includes nearly $35,000 in attorney fees and $32,000 in interest on the note accrued in July alone.
With the foreclosure, proceeds such as rent from the tenants at VAS Marketplace are being confiscated for use in repayment of the debt owed, according to the court papers. The Columbia attorney representing the U.S. Bank National Association, Christopher Towery, said he could not comment.
If Kahn fails to pay the total amount owed on the property including taxes by Sept. 5, Strickland has ordered the sale of the property at public auction at the Richland County Judicial Center. Because Sept. 5 is Labor Day, a legal holiday, the sale will officially be held on the day after.
Successful bidders must put down 5 percent of the amount of the bid on the property in cash or the equivalent.
Roddie Burris: 803-771-8398