September 28, 2003|By NEW YORK TIMES NEWS SERVICE
EDMONTON, Alberta - The temperature outside may have been hovering around 30 degrees, a raw September day even for this provincial capital in western Canada, but inside the West Edmonton Mall, it was still summer. Dozens of people were swimming in a 5-acre heated water park with palm trees, cabanas, a simulated strip of sand and machine-made waves. A short walk away, hundreds more looked on as a trainer cavorted with a dolphin.
The water park and the dolphin show are only two of the attractions at the 5.3-million- square-foot mall. Others are an ice-skating rink; an artificial lake in which a full-size replica of Columbus' ship, the Santa Maria, and four submarines are moored; an 18-hole miniature golf course; and a 447,000- square-foot amusement park. Not to mention 565 stores.
Opened in phases beginning in 1981 and now regarded as the world's largest shopping-and-entertainment center, the West Edmonton Mall was created by the Ghermezians, four brothers from Iran - Eskander, Nader, Raphael and Bahman.
U.S. District Court in Minneapolis recently awarded the Ghermezians the right to control the biggest mall in the United States, the Mall of America, near Minneapolis. The Ghermezians won the development rights for the Minnesota site in 1986, after pulling the kind of stunt for which they are known in Canada. They shipped a submarine that had been custom-built for them in Vancouver, British Columbia, to the Minneapolis suburb of Bloomington and parked it in front of City Hall.
The Mall of America has been managed by one of the Ghermezians' partners, Simon Property Group, the largest retail real estate investment trust in the United States.
But a judge's decision stunned the retail industry earlier this month when he ruled that Simon's co-chairmen had breached their fiduciary duty to the Ghermezians by secretly negotiating with a giant financial services company to gain a majority interest in the mall.
The judge ordered Simon to sell a 27.5 percent stake in the Mall of America to the Ghermezians' Triple Five Group, a transaction that would put Triple Five in charge of the property.
The malls in Bloomington and Edmonton are part of Triple Five's growing, privately held, real estate empire that includes three new shopping centers under development in Nevada and Arizona. Testimony at the trial showed that Triple Five has $1 billion in assets and a net worth of $500 million, according to Roger James Magnuson, one of the lawyers. It also owns Peoples Trust of Canada, a private bank in Vancouver, and has invested in technology and biotechnology companies.
Simon plans to appeal the ruling, a spokesman said. Simon executives did not respond to a request for an interview.
The Ghermezians, who say Iranian bazaars gave the inspiration for blending amusement and retail, have long felt snubbed and excluded from the decision-making process by their partners in Minnesota.
They say they intend to bring new energy and ideas to the Mall of America, whose potential, in their view, has yet to be realized.
"We want to make it more exciting and creative, and make everyone happy," said Raphael Ghermezian, who, with two of his brothers, granted an interview in mid-September at his lawyers' office in Minneapolis. "We will make Bloomington much more proud, more of a world landmark than it is."
One idea is to open in Minnesota a bigger version of their Fantasyland Hotel in Edmonton, where many rooms are elaborately decorated with Polynesian, African, Eskimo and other motifs.
Though some retail specialists in Minneapolis may sneer at the West Edmonton Mall as tacky, the brokers and consultants who have worked with tenants at the West Edmonton Mall say the Ghermezians have good instincts. "They are the true pioneers, at least in Canada, of combining entertainment and retail," said Blair Hodgson, a vice president of Oberfeld Snowcap, a retail consulting company in Toronto.
For retailers, he said: "If you're in the U.S. and going to go into Canada, your first choice is probably going to be that mall for your first entry. If you're in Canada, the mall is one of the must-haves."
Michael Kehoe, a regional real estate specialist and broker for Fairfield Commercial Real Estate in Edmonton, said: "Edmonton has had a love-hate relationship with the mall. When it originally came along, it killed the downtown. But right now, the city is in love with it."
The Ghermezian brothers were raised in Tehran. While studying at McGill University in Montreal, the three oldest brothers entered the rug business, quickly becoming successful by undercutting their competitors' prices. After their father, Jacob, left Iran in the late 1960s to join his sons, the family moved to Edmonton to join the oil and gas business. Eventually they became among the largest property owners in Alberta, accumulating 10,000 acres, most of which they no longer own.
