Troubled Cranberry Mall sold in $33.5 million deal

Many tenants were unaware of change in ownership

Real estate

March 04, 2000|By Jennifer McMenamin | Jennifer McMenamin,SUN STAFF

The owner of Cranberry Mall, the largest mall in Carroll County, has agreed to sell the troubled shopping complex for $33.5 million.

According to filings with the Securities and Exchange Commission, Shopco Regional Malls has negotiated the sale of the 525,000- square-foot mall on Route 140 to a subsidiary of Phoenix Four, a corporation licensed in the Bahamas and traded on the Luxembourg Stock Exchange.

Shopco's shareholders approved the transaction at a meeting Tuesday in New York, said Andre Anderson, manager of investor relations for Shopco, though most merchants have not been formally notified of the pending change in ownership.

"That's news to us," Gayle Economos, a spokeswoman for mall management, said of the pending sale. She said merchants had not been notified because "we can't inform them when we don't know."

The sale price is $20.3 million less than Shopco paid for the mall 12 years ago and is $2.5 million less than the construction cost, reflecting the mall's difficulties. The final sale price could vary by 3 percent before the deal is finalized, the SEC filings show. Currently, 20 of the mall's 78 storefronts are closed.

Cranberry Mall was a long time in coming to Carroll County -- a sign planted in farmland flanking Route 140 had boasted that a shopping center was coming soon, but for 15 years nothing happened.

When a New York-based developer bought the land in 1985 and broke ground for the shopping center, local economic development officials heralded it as a regional attraction that would bring 1,000 jobs and generate $2.6 million a year in sales taxes.

The mall struggled to meet expectations. Although business started briskly after the mall opened in 1987 -- store managers reported sales 10 percent to 40 percent higher than projected for the first weeks -- the mall started with several problems.

It opened with less than half its storefronts occupied. Within months, merchants were complaining about a lack of promotion. One of the four intended anchors, a store from now-defunct Baltimore-area department chain Hutzler's, was pulled out before the mall opened.

Business suffered further after a Wal-Mart opened in 1992 at Englar Business Park, about a half-mile away. In May 1998, Caldor entered bankruptcy and then closed. The discount retailer had been the mall's largest tenant and accounted for up to 10 percent of the rental payments to Shopco, the SEC filings show.

A few months later, Shopco put the mall up for sale. A prospective buyer agreed in December 1998 to pay $39.7 million for the property but then withdrew from the deal. In July 1999, Shopco agreed to sell the mall to a second buyer, which in November 1999 transferred its rights to a newly incorporated subsidiary of Phoenix Four, called Cranberry Properties MM Corp, SEC documents show.

"There are rumors flying all over the place, but we haven't heard anything carved in stone yet, and we don't hear anything at all from the mall," Dollar Tree manager Dan Reedy said this week. Some tenants received letters confirming the terms of their leases. Economos said they were mailed "in anticipation of a prospective buyer."

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