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Franklin Park Mall to get new operator

Toledo’s premier retail center, Franklin Park Mall, may be about to get a new operator.

The previous mall owner-operator, Starwood Capital Group, of Chicago, was pushed out three months ago after one of its subsidiaries, Starwood West Limited, defaulted on $254 million worth of bonds used to buy Franklin Park and six other malls in 2013.

A Southern California-based mall owner-operator and a New York-based firm that specializes in mall turn-arounds said Monday they are positioned to take over the operations and possible revitalization of Franklin Park shortly.

The partnership between Pacific Retail Capital Partners, of El Segundo, and Golden East Investors, of New York City, said they have been tasked with leading exclusive negotiations with senior lenders who now control the bonds for the Franklin Park property along with six other malls.

But there are several aspects to the deal that complicate matters.

The negotiations with the bondholders, who now hold the $254 million in bonds that are traded on the Tel Aviv Stock Exchange, must gain the approval of three separate groups of senior lenders.

Trustees appointed by an Israeli court earlier selected the partnership to take over the seven properties. But the portfolio’s senior lenders in the U.S. must still approve the deal, creating uncertainty around the deal.

Since the end of May, Franklin Park and the other six malls technically have been owned by the bondholders of Starwood West Limited and during that time at least six companies that own or operate malls had been vying to manage the portfolio of seven malls.

The seven malls, which Starwood bought in September 2013 for $1.6 billion from Australia’s Westfield Group, are Franklin Park; two Ohio properties, Belden Village Mall in Canton and Great Northern Mall in suburban Cleveland, two malls in California, and one each in Indiana and Washington.

Reportedly, all other firms dropped out, leaving Pacific Retail Capital Partners and Golden East Investors as the winning bidder.

“This would represent the largest shopping center transaction to date in 2020 and certainly since the start of the global pandemic,” Steve Plenge, Managing Principal for Pacific Retail Capital Partners, said.

The agreement with Starwood West Limited mandates the partnership between Pacific Retail and Golden East exclusively negotiate on behalf of the bondholders to resolve current issues with the senior debt, stabilize the assets, maintain and create value, and position the properties for potential future sale.

“These properties are all prime examples of retail centers that serve a vital need in the community and will benefit from the tailored management approach that is a hallmark of Pacific Retail. We have the knowledge, expertise, and work ethic to make real change in these shopping centers quickly. This is what Pacific Retail is known for, and the size of this transaction only makes the challenge more exciting for our seasoned team, many of whom have a history working on these assets in the past. We look forward to building relationships and bringing new life into each of these properties so they can thrive with upgraded shopping experiences and activations,” Mr. Plenge said.

Golden East Principal Uri Ben-Ezer said his company will seek to maximize the value of the Starwood properties.

Pacific Retail plans to send teams to the various malls and decide what to do to upgrade or change them.

“Upon consummation of the transaction, Pacific Retail’s experienced team will be deployed to evaluate each asset in the context of the neighborhood and what is valued by the customers to create a program to further enhance its appeal. This may include bringing in new uses, improving the physical space, adding programming and in some cases, master planning for the real estate,” Najla Kayyem, senior vice president of marketing for PRCP, said. “It does not matter to us what stage a center is in when we get our hands on it. Shopping centers, in general, must evolve to survive in the world we live and shop in today, and we are the ones who can strategically plan and execute on that vision. Our strategies shifted long before the pandemic occurred, and we have been able to stay ahead of the curve due to our approach.”

In March 2020, S&P Maalot downgraded the bonds of Starwood West Limited, triggering a default and subsequent acceleration vote by bondholders in May 2020. On July 1 an order by the District Court of Tel Aviv appointed temporary trustees to manage the Starwood West Limited estate on behalf of the bondholders and solicit formal restructuring proposals.


Posted By: The Toledo Blade on September 29, 2020.  For more information, please click here to read the source article.

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