Century III Mall gets new operator
Struggling Century III Mall soon will have a new operator, now that owner Simon Property Group has voluntarily defaulted on $78.97 million in debt on the West Mifflin property, officials said Tuesday.
Commercial real estate company Jones Lang LaSalle is being brought in to run the mall, said West Mifflin Mayor Christopher Kelly.
"We are extremely excited that we are going to get someone in there to market it," Kelly said, adding Indianapolis-based Simon has failed to invest in improving the property to draw in new retail tenants.
Simon spokesman Les Morris declined to comment. A Jones Lang LaSalle spokesman could not be reached for comment.
Kelly said he doesn't know the name of the lender that holds the mortgage on the 1.29 million-square-foot complex off Route 51. He understands that the bank has hired Jones Lang LaSalle, which is based in Chicago and has an office in Pittsburgh.
"We're very pleased that Simon Property has relinquished its chokehold" on the 32-year-old mall, Kelly said.
Kelly said he contacted Simon officials about making improvements to the complex, but "they were not concerned. They are spending tons of money in properties in more affluent areas, and they were willing to let this go by the wayside."
The mayor said he understands the default arrangement has been in the works for about a month, and details will be finalized in a few days.
A typical scenario after a default could have the lender foreclose to acquire title to a property, then look to sell to new ownership.
Century III Mall was 76.1 percent occupied as of Dec. 31, Simon's annual report for 2010 said. By comparison, the company's Ross Park Mall was 94.8 percent occupied, and South Hills Village was close behind at 94.2 percent.
The annual report said Simon Property Group was carrying $78.97 million in debt on the mall as of Dec. 31, with annual payments of $6.5 million. The debt will mature on Oct. 10, 2012.
Century III Mall opened in 1979 and was renovated and expanded in 1997 but since then has been plagued with vacancies. Allegheny County slashed the assessment on the property nearly in half in January, setting a market value of $30.6 million.
"It's in very bad disrepair," attorney John F. Cambest, who represents the West Mifflin Area School District, said of the mall. The school district is challenging the lower assessment, hoping to raise it even by a few million dollars to recoup some tax revenue, he said.
"The nature of nature of the tenants there are more dollar-store types" than the upscale retailers found at other suburban malls, Cambest said.
Century III still has Macy's, J.C. Penney, Sears and Dick's Sporting Goods as anchor stores.
Allegheny County Councilman Robert J. Macey, who also had heard of the arranged default, said the mall is an asset to the Mon Yough region. He envisions the property being redeveloped through a public-private partnership into a residential community with nearby grocery and other retail stores and other businesses.
The mall's current condition "really hurts West Mifflin. Every time they come in for a reassessment, West Mifflin is hurt," Macey said. The mall's value had been set at $71 million five years ago.
Kelly said the area around Century III Mall is improving with a new hhgregg appliance store, Marshall's discount department store, Aldi supermarket and other retailers. "We're very pleased that (Simon has) decided to let somebody else" run the mall, he said. "It's the best thing that can happen for this borough."