SoNo mall developer cashes out
Brookfield Properties nets $83M from deal
Just weeks after opening the SoNo Collection in South Norwalk, the mall’s developer disclosed Wednesday it has cashed out a majority of its stake for $304 million as it accumulates cash for new projects. It listed the total price of the transaction at $419 million, including the value of minority shares held by other investors.
Brookfield Properties had disclosed previously it was seeking to sell an investment stake in the new mall, which opened in midOctober and which at full capacity will have between 80 and 100 stores including Nordstrom and Bloomingdale’s. Brookfield inherited the project in August 2018 as part of its $15 billion acquisition of original developer GGP.
Brookfield disclosed the development on Wednesday morning in a news release announcing its thirdquarter results, reporting that it realized net proceeds of $83 million in selling 81 percent of its shares in The SoNo Collection.
Brookfield did not identify by name the mall’s new investors, with the company having set up an investment vehicle to effect the
transaction. Brookfield had reported previously an expected total investment in the SoNo Collection of $460 million, including $279 million it had spent as of June on development and construction.
“We’re getting (the) full development profit that we would expect for a project like this,” said CEO Brian Kingston, speaking on a Wednesday conference call. “We retained the liability to spend the remaining capital, and [investors] effectively buy a fully stabilized, completed mall . ... in one of the highest income demographics in the United States. We made a lot of development profit on this one.”
Kingston said that lower interest rates are driving buyer interest in Brookfield’s properties and by extension values, allowing Brookfield to sell off assets at good returns to build up cash reserves for new developments, including in New York City.
It is a common strategy in commercial real estate, including in Stamford’s South End where developer Building & Land Technology sold apartment buildings only a few years after completing them, reinvesting in new construction. Across Interstate 95 from The SoNo Collection, a Greenwich developer recently put the centerpiece of its Waypointe apartment and retail complex on the market for $142 million.
The SoNo Collection transaction was part of $3.7 billion in Brookfield asset dispositions for the
quarter, garnering the company net proceeds of $723 million in the aggregate. The company’s other major retail property in Connecticut is The Shoppes at Buckland Hills mall in Manchester.
Brookfield was actively marketing the SoNo Collection even as the Stamford Town Center mall — the next closest just eight miles west — hit the market quietly after losing multiple retailers to the South Norwalk mall. At 700,000 square feet, it is the largest commercial sale in Fairfield County since Summit Development’s purchase more than a year ago of the sprawling Matrix Corporate Center in Danbury, with the Fairfield firm planning to convert some of the newly renamed Ridge at Danbury to residential use with the possibility of retail as well.
In a letter to investors and on the Wednesday conference call, Kingston referenced the mall’s midOctober opening and early reception as stores open on a staggered basis throughout the holiday shopping season and into next year. Brookfield did not respond immediately Wednesday to a Hearst Connecticut Media query on the transaction and whether the company will continue to manage the mall on behalf of the new investors.
The mall debuted with retailers committing to leases for 90 percent of its space, with notable newcomers to Connecticut to include Amazon 4star; the Pinstripes chain of bistros that including bowling alleys and bocce courts; the Yard House sports pub; and Camp, a children’s experiential learning center started in New York City.
“The first several weeks of operation have been extremely successful, with consumer traffic in the tens of thousands and several of our retailers reporting sales above expectations,” Kingston stated Wednesday.
Mayor Harry Rilling had cited The SoNo Collection as a major economic development coup for Norwalk during his successful campaign for a fourth term in office, noting the mall would support some 2,500 jobs and predicting it would revitalize the city’s SoNo and downtown centers.