A company owned by a group of Triangle real estate investors is seeking bankruptcy protection after dismal leasing led to millions of dollars in losses at a New York mall.
Oberlin Plaza One, which is led by Raleigh real estate investor Jim Anthony, this week filed for Chapter 11 protection in U.S. Bankruptcy Court, as part of an effort to unload its only property, The Summit in Wheatfield, N.Y.
The filing is another example of how the recession is hammering retail landlords, but it likely doesn't foreshadow trouble for any of the dozens of properties throughout the state that Anthony has a stake in.
Bankruptcies can trigger lenders to call loans on other properties. But in this case, there are no lenders involved but Oberlin's partners.
Oberlin had lent money to the previous owner. But the borrower defaulted in 2002, and eventually handed over the Summit to Oberlin in lieu of foreclosure.
"We started out by simply making a loan and ended up owning a mall," Anthony, president of Raleigh real estate brokerage Anthony & Co., said in a statement. "Once in our possession, we were determined to make the mall successful for the tenants and the community ... but it was difficult to find and maintain enough tenants to be viable."
When Oberlin acquired the 825,000-square-foot mall, it was about 40 percent occupied and losing more than $1 million a year -- "a big bleeding wound," Anthony said in an interview.
Oberlin spent millions of dollars on improvements to stop the gushing. It replaced the roof, heating and air conditioning units, and chased tenants.
It got a big boost in 2005 from a lease with apparel retailer Steve & Barry's, which became Summit's biggest rent payer and a magnet for other tenants.
"We really thought that Steve & Barry's was going to help us turn the corner," Anthony said. "We really started to make some progress."
By late 2007, occupancy was up to 65 percent and Oberlin came close to breaking even for the year. But in 2008, as a soft economy turned to mush, Steve & Barry's went bankrupt and closed its Summit store. The deficit became too great for Oberlin, especially as a slump in consumer spending kept other retailers from filling the void.
"We started going upside down real badly," Anthony said.
The mall, which is estimated to be worth about $10 million, will be closed in June and decommissioned to help reduce expenses. It will be offered for sale as part of the bankruptcy reorganization, helping Oberlin's investors recoup some of the $17 million they have lost on the Summit.
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