New York group contracts to buy Regency Square
A New York-based venture of Mason Asset Management Inc. and Namdar Realty Group LLC has a contract to buy the Regency Square Mall, one of the area’s first major regional shopping centers but one that has experienced tough times.
Mason and Namdar, both based in Great Neck, N.Y., are expected to complete the purchase as soon as this week, according to sources who asked not to be identified because of the sensitivity of the deal.
Igal Namdar, president of Namdar Realty, confirmed the deal Monday. Asked if Mason and Namdar had a contract to buy Regency Square Mall, Namdar responded: “That is correct.”
The signature shopping mall opened in 1967 at 9501 Arlington Expressway to great fanfare, becoming the first major retail center outside of Downtown. It expanded over the years, but faced competition from newer developments and changing demographics.
The mall has been for sale at least since June and its retail occupancy dropped to less than 38 percent at the end of 2013.
Mason and Namdar have a history in redeveloping aging malls, but Namdar declined to discuss plans for Regency. He referred questions to Mason Asset President Elliot Nassim, who also declined Monday to comment on plans or whether a sale could be completed this week.
Industry sources have said the buyer wants to maintain Regency Square Mall as a shopping center. Earlier, there had been talk about other uses for the property, which sits in a high-profile area of Arlington just off of the Southside Connector and not far from the Interstate 295 East Beltway.
Regency’s purchase would not be Namdar’s first in Jacksonville. It bought the Jacksonville Regional Shopping Center at 3000 Dunn Ave. for $6.8 million last year. That 220,000-square-foot center is anchored by Winn-Dixie and JCPenney.
Regency Square Mall is much larger. At 1.4 million square feet, it encompasses at least 76 acres, not counting the separately owned Sears and Dillard’s stores that take up another 30 acres.
RS Properties Inc., in care of Chicago-based General Growth Properties Inc., bought the mall in 1991 from the Regency Square partnership.
The mall property owned by General Growth Properties was valued for 2013 tax purposes at almost $29 million. The purchase price negotiated by the Mason group hasn’t been announced either.
Regency Mall tenants were notified in December of a possible sale to Mason Asset Management and Namdar Realty Group.
The letter, obtained by the Daily Record, carried the signature of Katherine Donnelly at General Growth Properties.
The Daily Record called and emailed Donnelly on Monday, and she replied by email that “we do not comment on the operations of any of our properties.”
Regency takes root
Regency Square was the area’s first enclosed regional mall when it opened 47 years ago. It was expanded in 1981-82 and added more retail space later.
The mall faced increased competition from other area malls, notably The Avenues mall, which opened in 1990 at Southside Boulevard and Philips Highway, and then the landmark St. Johns Town Center, the open-air center that opened in 2005 at Butler Boulevard and the I-295 East Beltway.
River City Marketplace opened in 2006 in North Jacksonville, which drew shoppers that might have made the drive south to Regency.
The city’s growth sprawled and shopping options followed.
Those changes, along with the challenges of seven recessions since it opened, took a toll at Regency Square.
In its year-end financial report, General Growth Properties reported last week that occupancy at Regency Square dropped to 37.9 percent from 43.8 percent at the end of the third quarter and 60.1 percent at the end of 2012.
General Growth continued to say that Regency Square has been “transferred to the special servicer,” which has been handling the property, without giving more details.
That could change when Belk opens a new store 3 miles east in March 2015. Belk has not commented about its plans for the Regency store.
What Mason can do
Namdar Realty Group is a privately held commercial real estate investment and management firm.
It says on its namdarrealtygroup.com that it owns more than 5 million square feet of commercial real estate in the United States and continues “to grow at an unprecedented pace.”
It says the company’s portfolio includes a number of retail strip centers and medical and-or office buildings.
The Namdar portfolio listed online shows at least 50 properties in states including Alabama, Florida, Illinois, Indiana, Iowa, Kentucky, Michigan, New Jersey, New York, North Carolina, Ohio, Oklahoma and Tennessee.
Plans for Regency might mirror those for DeSoto Square in Manatee County.
In November 2012, the Bradenton.com news website reported that Mason Asset Management acquired Manatee County’s only indoor shopping mall for about $25 million from Simon Property Group Inc.
At the height of the real estate boom in 2004, DeSoto Square was valued at $80.2 million, property records show.
The news site said Mason bought the mall with plans to restore traffic at the aging shopping center with a facelift and heightened security.
“We feel this was an exciting opportunity because there is still life at the mall,” Nassim said in the report. “It is just a good example of the previous owners neglecting it. We plan to come in and roll up our sleeves.”
DeSoto Square was built in 1973 and expanded in 1997. Simon Property acquired the shopping center in August 1996, the news site said, adding that over the years, the mall fell into disrepair as routine maintenance and aesthetics were not upgraded and average rents plummeted.
The news site said Mason planned an immediate mall facelift, starting with improved parking, more signage and a new surveillance security system. The company also was in talks to bring a sheriff’s substation to the mall, an education-related program and a replacement for a vacant Dillard’s store.
Nassim said he wasn’t concerned about the ramifications of the 115-store University Town Center, an upscale mall that was starting construction nearby.
How did Nassim do?
Last November, a year after the purchase, the HeraldTribune.com site said tenants remained hard to come by, a cross fit gym was the only new business to open and there was a question whether Macy’s would leave once the Mall at University Town Center opened this year. Macy’s is now listed on the new mall’s website.
Mall manager Richard Bedford told the news site that the mall was doing exactly what it should be doing: reinvesting in the Manatee County community. “We cater to the people who live around here. We know what we are — a blue-collar mall for working people and that’s what we’ll keep on being,” he said.
The news site said DeSoto Square had been plagued with a history of theft and other crime, which caused the mall to struggle to retain some quality tenants.
It reported that after Mason came in, Bedford said security at the mall improved. A 24-hour towing service keeps cars and late-night visitors out of the parking lot or inside the mall after hours.
It said DeSoto Square also was making more of an effort to be involved in community events. The Manatee County Chamber of Commerce held a meeting at the mall for the first time in the chamber’s history.
A long discussion
Regency has been the talk of redevelopment for a while.
The Daily Record reported in June that a consultant for a distressed debt advisory firm met with city officials for exploratory talks on possible uses for Regency Square Mall.
That meeting included City Council member Clay Yarborough; Joe Whitaker, a city Office of Economic Development executive; and Lyneir Richardson of Case Property Services and CEO of Brick City Development Corp., the primary economic development organization for Newark, N.J.
Richardson declined comment, citing confidentiality agreements.
The mall’s west end, anchored by Sears, has been hit by vacancies, which Whitaker said was part of that discussion.
Whitaker said the consultant meeting was to look at the mall and provide a “wide variety of suggestions” and concepts that could help or hinder community support and increase foot traffic for the mall’s other tenants.
No recommendations were provided and Richardson was “basically looking for ideas,” Whitaker said.
For years, rumors have circulated the mall could be used as an educational facility, which also was discussed, as was an idea for a call center that potentially could qualify for the Urban Job Tax Credit program.
The Daily Record then reported in September that Rockwood Real Estate Advisors of New York had been retained to market Regency Square to qualified investors, according to an offering statement.
Rockwood Real Estate Managing Director Thomas Dobrowksi has not commented about a sale.
The mall’s anchor tenants are Belk and JCPenney.
Belk is at the center of the enclosed mall and customers use the store as a pass-through from the Penney-anchored wing on the east to the largely vacant Sears-anchored wing on the west.
Sears and Dillard’s separately own their stores at the mall. Dillard had opened a full-line store but has converted it into a clearance center.
Sears issued a statement. “This issue has no impact on Sears. We continue to serve our members and customers at Regency Square, and remain committed to the Jacksonville community,” said Howard Riefs, director of corporate communications with Sears Holdings in Chicago.
Dillard had no comment about a contract to sell Regency Square.