Investor interest drove A&G Realty Partners' Jan. 28 sale of former fee-owned locations; buyers included furniture chains, as well as landlords seeking control of mall big-box space.
NEW YORK, March 8, 2019 /PRNewswire/ -- Real estate advisory and brokerage firm A&G Realty Partners today announced the results of its Jan. 28 bankruptcy auction of the final department store properties formerly owned by The Bon-Ton Stores, Inc. Additionally, the firm reported the completion of two private sales outside of the auction process.
With stores ranging in size from 45,000 to 165,000 square feet, the assets on offer during the New York sale included locations in Iowa, Pennsylvania, Michigan, Indiana and Illinois. They were formerly operated under the Bergner's, Carson's, Younkers, Elder-Beerman and Bon-Ton banners.
Here is a breakdown of the results:
- A home furnishings retailer which operates stores under several trade names acquired the Younkers at Coral Ridge Mall in Coralville, Iowa (98,458 sq. ft., one-story, 9.1-acre lot).
- Mall owner Abbell Associates purchased the Younkers at Merle Hay Mall in Des Moines, Iowa (165,000 sq. ft., two stories, 7.81-acre lot).
- Mall owner Brookfield Properties purchased the Carson's at Spring Hill Mall in Dundee Township, Ill. (128,000 sq. ft., two stories, 8.76-acre lot). The property is in the midst of a $40 million renovation.
- Mall owner Simon Property Group purchased the Bergner's at White Oaks Mall in Springfield, Ill. (125,000 sq. ft., two stories, 1.2-acre lot).
- The Economic Development Corporation of Wayne County purchased the Elder-Beerman in Downtown Richmond, Ind. (freestanding 100,000-sq.-ft., two-story building on 1.5-acre lot). "It is anticipated that the building will be part of a planned revitalization of Richmond's downtown," said Michael Jerbich, a Chicago-based Principal at A&G.
- Mall owner Brookfield Properties bought the Younkers at River Towne Crossings in Grandville, Mich. (150,081 sq. ft., two stories, 9.94-acre lot).
- HOM Furniture acquired the Bon-Ton at Lewistown Mall in Lewistown, Penn. (46,660 sq. ft., one story, 0.83-acre lot, freestanding).
Removed from the auction were the Herberger's buildings in downtown St. Cloud, Minn. and at Midway Marketplace in St. Paul, Minn. "We are entertaining other private-sale offers on both of these stores," Jerbich noted. "Additionally, we are exploring options for the Younkers building at The Lakes Mall in Muskegon, Mich."
In late January and early March, A&G completed private sales on two other store properties from The Bon-Ton portfolio. On Jan. 29, the firm closed on the sale of the former Younkers building at Miller Hill Mall in Duluth, Minn., to Essentia Health. The regional healthcare system is reportedly converting a portion of the 141,000-sq.-ft. building's first floor into a fitness and therapy center, with plans for the balance of the two-level space to be announced at a later date. "This acquisition is consistent with the growing trend of healthcare going where people congregate," noted A&G Senior Managing Director Jim Terrell.
This was followed on Mar. 7 by the sale of the 155,000-sq.-ft. former Carson Pirie Scott store at Edens Plaza in Wilmette, Ill. to mall owner Newport Capital. The two-story building sits on a 7.22-acre parcel.
"Overall, this final auction proceeded as expected, with landlords buying back the bulk of the auctioned properties in a bid to take control of key sites on their properties," said Emilio Amendola, Co-President of A&G Realty Partners. "These anchor boxes typically have site control features—if the owner of the mall wants to embark on a redevelopment that will ramp up productivity, gaining control of the box is critical. Otherwise, you would have to ask the owner of that building for permission before your plans could proceed."
In some of the deals, municipal financing was a part of the picture, which illustrates the centrality of many mall properties to these communities, Amendola added.
In May 2018, A&G was retained to dispose all real estate assets of The Bon-Ton Stores, Inc., on behalf of a joint venture between Great American Group, LLC (a subsidiary of B. Riley Financial, Inc.), Tiger Capital Group, LLC and Bon-Ton's Second Lien Noteholders. The assets included seven ground leases, 194 leased locations and 23 fee-owned properties.
To date, 20 fee-owned and seven leased properties have been successfully sold to landlords, storage users, developers/investors, fitness centers, a casino, home furnishings retailers, and healthcare users.
"Given the well-documented contraction of the department store sector, the results to date for the fee-owned and leased properties point to the need for landlords to reimagine their vacant anchor spaces," said Amendola. "We are pleased with the results of this sale, as well as our prior auctions of former Bon-Ton assets, during a challenging time for U.S. retailing."
For additional information on the two Minnesota Herberger's properties, contact: Michael Jerbich (Michael@AGRealtyPartners.com); Jim Terrell (Jim@AGRealtyPartners.com); Chris Draper (cdraper@AGRealtyPartners.com), or Emilio Amendola (Emilio@AGRealtyPartners.com)