New York firm buys Burnsville Center debt
The New York company that bought the debt on half of Burnsville Center has a record of buying distressed malls in other cities, the Minneapolis/St. Paul Business Journal reported Dec. 3.
Kohan Retail Investment bought the note on the mall for $18 million, the Journal reported, citing an anonymous source. Half of the 1.1 million-square-foot mall was put up for auction Oct. 26-28.
“Technically, CBL & Associates Properties of Chattanooga, Tennessee, is still the owner of the floundering mall, but it’s likely Kohan will foreclose on the property and take ownership,” the Journal reported.
Kohan lists 34 malls in its nationwide portfolio.
“We see the future of aging malls as a community setting where entertainment, shopping, and food come together,” the company says on its website.
While the city of Burnsville has rezoned most of the mall property for mixed use as part of its Center Village redevelopment plan, “that does not appear to be the track record of Kohan, which is based in Great Neck, New York,” the Journal reported.
The company says malls are “evolving, and as time goes on they are no longer just a tent to house box stores and chains, but are home to more local small- and medium-sized business of all stripes. Large spaces offer opportunity for fundraising events, festivals, farmers markets, miniature golf, dancing, concerts, banquets, theatre, and virtually any social gathering all under one roof with protection from the elements.”
Kohan has “embraced entrepreneurism in our malls to assist new businesses in getting off the ground,” the company says. “This is a great time for businesses to consider large spaces that can be transformed into localized shops at affordable prices.”
The opening bid at auction for the 522,088 square feet of mall property owned by CBL was set at $7 million. Outstanding debt on the property was $64.2 million. The mall opened in 1977.
CBL’s portion included interior tenant spaces and common areas, as well as four outlots occupied by five tenants. Portions of the mall owned by Seritage Growth Properties (the former Sears space vacated in 2017), Macy’s and J.C. Penney were not part of the auction.
It’s possible the new owner might “keep collecting rents from the existing tenants and continue to pull in profits (the mall made $7.3 million last year), wait for the leases to expire and open it up for redevelopment,” the Journal reported.
But the mixed ownership could make that difficult, it said.