The Dayton’s Project, conceived as an office and retail showplace for downtown Minneapolis, has entered a new chapter of financial woes. A New Brighton turnaround management firm has taken receivership of the downtown Minneapolis property amid claims that the building’s current owner failed to make mortgage payments for months.

In a Sept. 23 order, Minnesota District Court Judge Jamie Anderson said that New Brighton-based Lighthouse Management Group Inc. has been appointed as “receiver” of the iconic Nicollet Mall property. That essentially means that Lighthouse takes over all responsibilities managing and operating the building, and it spells out big changes for the building’s current ownership, New York-based investment firm 601W Companies.

The order states that Lighthouse must manage the Dayton’s Project “so as to prevent waste, pay the expenses for real estate taxes and insurance, pay for normal maintenance and repair, and to perform the terms of the mortgage.” In addition, the order gives the company the authority to list or market the building for sale.

The court’s order follows a lengthy complaint filed Sept. 13 by New York-based Fortress Credit Corp., which provided a $200 million mortgage to 601W back in 2021. Fortress stated that 601W missed its monthly mortgage payment on May 1 and continued to miss payments in the months that followed. The lender went on to say that it has already put up nearly $4 million to “avoid the termination of various utilities and essential services” in the building.

Notably, the property isn’t yet in foreclosure, but it appears that option could still be on the table: The complaint said that Fortress “is entitled to foreclose the mortgage by action and exercise other remedies as set forth in the loan documents.”

601W Companies didn’t respond to requests for comment on the news on Tuesday afternoon. Lighthouse Management Group declined to comment.

When it was first announced three years ago, 601W’s loan from Fortress was cause for celebration. At the time, the property was facing a foreclosure sale by a prior lender. The new funding from Fortress prevented the property from going to sale.

601W purchased the Dayton’s Project building – a former Macy’s department store – for $59 million in 2017. The company went on to pour millions more into renovating the property and making it ready for new office and retail tenants. Though Dayton’s has landed a few tenants over the years, the 1.2-million-square foot building is still largely empty, and promises of a food hall on the first floor haven’t yet materialized.

The Dayton’s Project is perhaps one of the highest profile buildings to be placed into receivership, but it’s certainly not the only one. Property owners in downtowns across the country continue to struggle with declining occupancy rates and largely empty buildings in the wake of Covid-19. As a result, receivership of these large and expensive properties is becoming more common nationwide.