The owner of Fairlane Town Center in Dearborn has fought off an attempt by a lender to wrest control of the shopping mall — at least for now.
A Wayne County Circuit Court this week denied a request by the lender, the Atlanta-based Peachtree Group commercial real estate investment firm, to appoint a receiver for the mall. But Judge Annette Berry’s order said the lender can still try again later for a receiver, if necessary.
Fairlane Town Center in Dearborn photographed on Friday, Jan. 10, 2025.
The lender filed suit against Fairlane’s owner in late November, claiming the owner missed October and November payments on its $28 million loan.
The lawsuit also claimed the owner was taking rent checks from Fairlane tenants that should have been deposited into a specific bank account as collateral for the loan, and instead depositing them into a different account.
Fairlane mall has been owned since March 2023 by New York-based Kohan Retail Investment Group, which is known for buying struggling and sometimes distressed shopping malls, including the now-demolished Eastland Center in Harper Woods.
According to the lawsuit, a representative for the lender at one point confront the head of the New York-based firm, Mike Kohan, about the alleged diversion of mall tenants’ rent payments.
“Alarmingly, Kohan did not dispute the alleged possibility that he and borrower were improperly diverting tenant rent payments,” the lawsuit read.
Fairlane Town Center in Dearborn photographed on Friday, Jan. 10, 2025.
Although Fairlane’s owner eventually did come up with the money for the October and November payments, the lender wouldn’t accept them or the subsequent December payment — even as $2.3 million was sitting in the bank account that the lender was authorized to withdraw from, according to court documents from the mall owner’s attorney.
Kohan went on to sign a Dec. 18 affidavit stating that at no time did he admit that he had misappropriated rent payments, including for a $85,000 check that, in actuality, was paid to a contractor to snowplow the mall’s massive parking lot.
However, the mall owner did concede in court documents to owing unpaid Wayne County property taxes for Fairlane.
The total unpaid property tax balance was $2.9 million in September, the lawsuit says.
The current delinquent tax balance for the mall, as of Friday, was $1.2 million for 2023 taxes, according to the Wayne County Treasurer’s Office website. The mall also owes $1.3 million for 2024 taxes, which haven’t been paid but are not yet deemed delinquent.
The judge’s order, issued Wednesday, says the mall owner needs to deposit “any and all sums” due to the lender into the proper bank account, including rent payments from Fairlane tenants.
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The mall owner’s attorney declined comment Friday, as did a manager for the mall. A local attorney for the lender did not immediately respond to a comment request.
Fairlane opened in 1976 and is spread out over three floors. Although long past its heyday, the mall is still said to be 85% leased out, and its Macy’s and JC Penney anchors have avoided recent nationwide store closure announcements from the retailers.
The mall’s previous anchor stores were Sears, Lord & Taylor and an AMC movie theater. Ford Motor Co. went on to occupy the old Lord & Taylor space for $1.6 million a year in rent, but has since moved out.
Fairlane Town Center in Dearborn photographed on Friday, Jan. 10, 2025.
Fairlane was in the news last May after DTE Energy posted a shut-off warning at a mall entrance, although the past-due bill was ultimately paid.
Court documents show Kohan’s group acquired Fairlane in 2023 for a total $52.8 million.
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The previous owner, Dallas-based real estate firm Centennial, had owned the mall for less than a year before selling it to Kohan. Centennial had paid $68 million for it in May 2022, land records show, and the firm never publicized why it parted with Fairlane so soon after buying it.
The owner before Centennial, Starwood Retail Partners, acquired Fairlane in 2014 for a reported $98.5 million from Taubman Centers.
Contact JC Reindl: 313-378-5460 or jcreindl@freepress.com. Follow him on X @jcreindl
This article originally appeared on Detroit Free Press: Fairlane mall owner fends off move by lender