An­chors razed, ten­ants go un­der

One busi­ness owner calls shop­ping cen­ter’s hol­low­ing out ‘con­struc­tive evic­tion’

The Morning Call - - FRONT PAGE - By Jon Har­ris

With one ghost of re­tail past on the ground, the own­ers of Phillipsbu­rg Mall ap­pear poised to de­mol­ish another shop­ping hub of yes­ter­year: the for­mer Bon-Ton depart­ment store.

Mall ten­ants ex­pect, with de­bris from the now-de­mol­ished Sears cleaned up, that work will soon start on the 65,000-square-foot va­cant space. A memo cir­cu­lated by mall man­age­ment over the sum­mer, and re­viewed by The Morn­ing Call, ad­vises ten­ants that a con­struc­tion crew will be on site do­ing de­mo­li­tion work on the two for­mer an­chors. Ten­ants re­port crews are busy in the for­mer Bon-Ton, do­ing pre­lim­i­nary work and strip­ping the in­te­rior.

What re­mains un­clear is what the mall’s own­ers are plan­ning. When reached by phone late Wed­nes­day morn­ing, Ma­son As­set Man­age­ment Pres­i­dent El­liot Nas­sim asked The Morn­ing Call to call him back later that day, only to not be avail­able at the time he re­quested. Ma­son As­set man­ages the mall for part­ner Nam­dar Realty Group.

In March, Nas­sim re­it­er­ated to The Morn­ing Call that the part­ners were weigh­ing a re­de­vel­op­ment, joint ven­ture or sale at Phillipsbu­rg Mall, reach­ing the “con­clu­sion that this site is bet­ter suited as some­thing other than a mall.”

Phillipsbu­rg Mall is one of seven malls in the owner’s port­fo­lio listed on a re­de­vel­op­ment/as­set sales page in a quar­terly pre­sen­ta­tion re­leased Aug. 30 by Namco Realty LTD, the ve­hi­cle by which Nam­dar raises money by is­su­ing bonds on the Tel Aviv Stock Ex­change. On that page, the com­pany touts its re­turn on in­vest­ment with each prop­erty, but now the malls have started to drag down over­all re­sults.

In the case of Phillipsbu­rg Mall, the com­pany claims a gross profit of $15.1 mil­lion, rep­re­sent­ing a 130% re­turn on

cost when fac­tor­ing in its pur­chase price of $11.5 mil­lion in Jan­uary 2013. But the mall now has neg­a­tive cash flow, a net op­er­at­ing loss and an oc­cu­pancy rate of 37%.

Jeff Green, a part­ner at Hoff­man Strat­egy Group, a re­tail con­sul­tancy, said the real es­tate un­der the mall is more valu­able than the ac­tual shop­ping cen­ter at this point. De­mol­ish­ing the for­mer Sears and Bon-Ton, he said, puts Nam­dar in a good po­si­tion to re­de­velop the prop­erty it­self with a small re­tail com­po­nent and other non­re­tail uses, or sell it to another party that will re­de­velop it.

“The fact that they only paid $11.5 mil­lion for the prop­erty leads me to be­lieve that they will likely try to sell the prop­erty,” Green said.

To get there, re­main­ing mall ten­ants claim, the own­ers are pur­pose­fully emp­ty­ing out the shop­ping cen­ter, mak­ing it eas­ier to re­de­velop. All that open space was use­ful last month when a pro wrestling event lured a cou­ple hun­dred peo­ple to the mall, which no longer has a food court.

De­clin­ing malls are in­creas­ingly be­ing re­de­vel­oped across the coun­try un­der such a dy­namic. For ex­am­ple, in 2017, a Mis­souri real es­tate de­vel­op­ment firm scooped up the Schuylkill Mall near Frackville, switch­ing the strug­gling cen­ter’s re­main­ing ten­ants to month-to-month leases af­ter the sale as it worked its way to­ward clos­ing the mall to build two ware­houses in its place.

In the early days of Nam­dar’s own­er­ship of Phillipsbu­rg Mall, which is spread across Po­hat­cong and Lopat­cong town­ships, the shop­ping cen­ter’s staff tried to get new ten­ants, ac­cord­ing to Ron Noo­nan, owner of the Gold’s Gym that opened there in 2014.

But those ef­forts have stopped, Noo­nan said, with only month-to-month leases be­ing of­fered and an own­er­ship group that doesn’t an­swer emails about the mall’s fu­ture or con­di­tion. Mean­while, the com­mu­nity has a neg­a­tive out­look on the mall and won­ders when it might close, a sit­u­a­tion that Noo­nan says has hurt his busi­ness as he tries to re­tain and at­tract gym­go­ers to 12- and 18-month mem­ber­ships.

That puts Noo­nan in a tough spot, as some­one who fun­neled sav­ings into the gym and has an out­stand­ing loan that will have to be sat­is­fied.

Noo­nan likens Nam­dar’s strat­egy to “con­struc­tive evic­tion.”

“Ba­si­cally, if I rented a house to you, and I cut off the oxy­gen sup­ply to the house, you have two op­tions: You ei­ther get out of the house or you die,” Noo­nan said. “That’s what this land­lord does.”

Be­fore the mall got to this point, the own­ers fo­cused on mon­e­tiz­ing the shop­ping cen­ter’s real es­tate.

Nam­dar sold off four out­par­cel restau­rants for about $5.3 mil­lion be­tween De­cem­ber 2014 and Sep­tem­ber 2015. Three of those es­tab­lish­ments — Chick­fil-A, Pan­era Bread and Star­bucks — re­main open, while the Friendly’s closed late last year and is listed for sale for about $1.1 mil­lion on Mar­cus & Mil­lichap’s web­site.

Fur­ther, in March 2016, the owner es­tab­lished the mall as a con­do­minium, al­low­ing it to set up its depart­ment stores as units. Sears, The Bon-Ton and the closed J.C. Pen­ney con­sti­tuted Unit 100, while the Kohl’s space be­came Unit 200, ac­cord­ing to fil­ings with the War­ren County clerk’s of­fice. The con­do­minium’s board of trus­tees, fil­ings show, is made up of Nam­dar CEO Igal Nam­dar, Nas­sim and Matin Hakimi, all of Great Neck, on Long Is­land, New York.

The Kohl’s space was sold in Oc­to­ber 2017 for $2.6 mil­lion to H&R Phillipsbu­rg LLC, a Cedarhurst, New York, firm that lists its man­ag­ing mem­ber as Joseph Eisen­berger in fil­ings in New Jersey. A mes­sage left for Eisen­berger at Par­a­digm Com­mer­cial Real Es­tate LLC was not re­turned.

Another part of Nam­dar’s strat­egy is to lower real es­tate taxes, some­thing it con­tin­ues to at­tempt in New Jersey Tax Court by seek­ing sig­nif­i­cant re­duc­tions in the as­sessed value of the mall. Po­hat­cong Mayor David Slack, who has won­dered whether de­mol­ish­ing large chunks of the mall could be geared to­ward that goal, said the town­ship — at this point — is just hop­ing the site’s fu­ture in­volves a sus­tain­able tax ben­e­fit to the com­mu­nity.

For now, Slack and the mall’s re­main­ing ten­ants are left won­der­ing about how much longer the 30-year-old shop­ping cen­ter will last. At Gold’s Gym, Noo­nan said the busi­ness is hang­ing in there on a day-to-day ba­sis, wish­ing they had the money to re­lo­cate down the road — just like Old Navy did.

“They’re lit­er­ally tear­ing the mall down around me,” Noo­nan said. “At this point, I’m wav­ing a white flag.”


The Bon Ton stands empty in Au­gust at the Phillipsbu­rg Mall. The for­mer an­chor is ex­pected to be de­mol­ished soon, af­ter the mall pre­vi­ously knocked down the old Sears.

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