Everybody's looking for deep discounts and special sales around the holidays. But the new owners of The Citadel mall in Colorado Springs might have gotten the biggest deal of all.
A New York investment group this week paid $20 million to purchase the mall, according to documents recorded Wednesday in the El Paso County Clerk and Recorder's Office. When it last sold in 2007, The Citadel went for $153.2 million - nearly eight times more than what the New York group paid.
"Just from an investment standpoint, wow," Mary Frances Cowan, a longtime broker with Quantum Commercial Group in Colorado Springs, said.
Three limited liability companies formed by Namdar Realty Group, Mason Asset Management and CH Capital Group bought The Citadel from partnerships controlled by a Maryland-based lender. The lender took over the mall from financially troubled owners in Arkansas, who had bought it in 2007.
Elliot Nassim, Mason's president, declined to say what plans the new owners might have for the mall.
Their purchase includes 429,000 square feet of interior mall space, along with parking lots, a few small vacant parcels, the free-standing buildings housing Sportsman's Warehouse and the shuttered Krispy Kreme Doughnut shop, El Paso County records show. The purchase doesn't include the former Macy's department store, J.C. Penney, Dillard's and Burlington Coat Factory - anchor spaces that all are under separate ownerships.
The Citadel opened in 1972 northwest of Platte Avenue and Academy BoulevardChapel Hills Mall opened 10 years later on the Springs' north side.
When The Citadel sold in 2007, the commercial real estate market was attractive for investors, Cowan said. Then the economy nosedived, dragging down commercial real estate with it.
The Citadel's diminished value, however, reflects more than just a bad economy; it's a statement on the future of malls, which have lost ground for decades to trendier, open-air retail centers, said John Egan, a broker with NAI Highland Commercial Group in the Springs.
Consumer habits also have changed, he said. Shoppers want to park in front of their store and walk in and some consumers prefer online shopping.
"Regional malls, they're at a very interesting intersection right now," Egan said. "If you go around the country, some malls are doing well and most of them are struggling to find their identity again. The Citadel's no different."
It has other challenges, too. The Citadel serves older parts of town where household incomes are lower; crime also is a concern at the mall. Meanwhile, Macy's has been closed since 2009, while Dillard's turned its department store into a clearance center earlier this year.
"There's really no reason at this point for people to make a drive to that mall," Cowan said. "There's nothing there to draw people in."
But by paying just $20 million, the new owners have flexibility to make something happen at the mall, Cowan and Egan agreed. It's just a question of what they might want to do.
The discounted purchase price means the owners could lower lease rates to attract tenants, Cowan said. Or they could spend money upgrading the mall, Egan added.
Then again, the new owners might be more interested in the value of The Citadel's land or its potential as something other than a mall - becoming a home for apartments or offices for call centers and other employers, Egan said.
No matter what the owners decide, Cowan said, "they've got a lot of work to do."
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