Despite owing Frazer and Allegheny County millions of dollars in fines, the owner of the Pittsburgh Mills mall campus is purchasing real estate there.
It’s a practice that experts say is uncommon but not prohibited.
“In general, I mean, if real estate’s for sale, and you have a buyer and they have the means to buy it, they can acquire it,” said Robb Paltz, associate managing director at Moody’s Ratings.
According to the Allegheny County Real Estate portal, Pitt Realty LLC purchased the Macy’s store attached to the mall.
Pitt Realty is a limited liability company listed as one of the owners of the Mills mall and is owned by Namdar Realty Group.
County real estate records show the commercial real estate investment firm bought the Macy’s property — a little more than 12 acres — for $2 million at the end of January.
Macy’s, a Mills anchor store, had owned its store property at the mall.
“Namdar has really been a buyer of last resort,” said Manus Clancy, head of data strategy at LightBox, a commercial real estate information and technology platform.
Namdar, a commercial real estate firm, long has followed the business model of purchasing mall properties for cents on the dollar. Rather than putting money into the property to refurbish it, Namdar collects lease revenue from the mall’s remaining shops while sometimes letting the site deteriorate, Clancy said.
“They run it until the wheels fall off,” he said.
Namdar officials did not respond to multiple TribLive requests for comment.
A package deal
If there’s no outlook for fixing up the Mills mall property, why might Namdar acquire more assets there?
Clancy reasoned that owning all of the property on the campus could serve as a more advantageous position toward a future sale.
“If they were buying something like Macy’s, they may think ‘if we buy Macy’s and package it, it may become more valuable in the future if a sale does arise,’” he said. “There’s value in having an assemblage.”
The sale comes on the heels of Macy’s announcing its Mills mall location is on a list of 150 locations the New York City-based retailer plans to shutter throughout the year.
About 14 of the stores, including the Mills location, were expected to close by April.
While Paltz did not speak specifically to Namdar, he said when a company purchases a property on a campus of an otherwise dying mall, it can serve as a way to have greater control over the site.
“From a strategic standpoint, assembling more of the campus, the land, it’s not really doubling down on the mall,” Paltz said. “It’s really about buying optionality for what comes next.
“It’s for flexibility.”
He said purchasing more of a campus gives owners an easier route for potentially repurposing the site or rezoning the area.
“It can kind of improve the feasibility of breaking a single large obstacle of one large mall into optionality,” Paltz said.
Despite Namdar being on the hook for millions of dollars in citation fees from the township, Clancy said, from a business perspective, purchasing the space is a completely different beast.
“Not paying the fines could be them not wanting to throw good money after bad,” he said. “On the other hand, buying a new parcel is seen as a complete separate situation.”
Clancy said the deal is reminiscent of the offloading of Sears stores.
When the former world’s largest retailer filed for Chapter 11 bankruptcy in 2018, the storefronts were being marketed in every way possible to potential buyers, be it through location or surrounding population, Clancy said.
Depending on the success of the marketing tactics, the industry saw what used to be previous Sears stores being sold for anywhere from $5 million to $15 million.
The sale price for the Macy’s location, however, was lower than what would normally be expected, Clancy said.
“Here, I imagine that Macy’s has been beating the drum on this property for the last 18 months or so and they thought, ‘We’ll never get a better bid than this,’” Clancy said. “If someone was interested, they would’ve gotten more.”
Macy’s did not respond to a TribLive request for comment.
Mall for sale
As for the larger mall property, Namdar has been quietly shopping the Mills property to prospective buyers for the past eight months.
An email received by some local real estate agents last June from Namdar Realty Group’s chief operating officer, Dan Dilmanian, said Namdar is “quietly exploring an off-market sale.”
According to Namdar, the mall building is 900,000 square feet. Mixed-use and warehouse uses are permitted, the company said.
There are 43 acres of excess, buildable land on the property, it said.
New York-based Namdar acquired the property in 2018.
$29 million in fines owed
In 2023, Frazer initiated a sheriff’s sale on the mall, seeking $11.5 million in accrued special assessment bills, but Namdar paid that money before the sale could be held.
The company is appealing more than $11 million in fines handed down last August by District Judge Michael Girardi.
At that time, the owners were found guilty of 364 code violations for lack of attention to mall maintenance, including cratered roads, overgrown weeds and building violations cited by Frazer Code Enforcement Officer Bill Payne.
In November, Mills owners were ordered to pay more than $17 million in response to poor road, sidewalk and door conditions at the mall complex. Allegheny County Judge Thomas Flaherty handed down the fines, saying throughout each juncture and appeal, it hasn’t appeared that Namdar has made any corrective proposal or plan to fix the issues.
Recently, shoppers have seen repaved roads in some areas of the Mills complex.
Barring successful appeals, the latest ruling means the mall’s owners now face almost $29 million in fines over the condition of the property.
