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Talks break off for Westdale Mall purchase in Cedar Rapids

Rick Smith, CR Gazette –

Westdale Mall’s future seems as murky and grim as ever.

John Frew — the developer and project manager of the city’s high-profile convention complex and hotel projects — on Friday said he and a group of investors have withdrawn what seemed promising plans to buy and redevelop the long-troubled, half-empty, 32-year old Westdale Mall.

Just two months ago, Frew expressed optimism that the purchase would move ahead when he announced that one of his firms, Willow Creek Ventures LLC, had assembled local and non-local investors and had signed a purchase contract with the mall’s owners.

On Friday, Frew said the purchase contract called for his investment group to act by Aug. 1 on the purchase, and instead, the group opted to set aside their plans for the mall, he said.

Frew said the current out-of-state owners declined to give his group more time to try to work out difficulties associated with the purchase.

“Out of 100 issues, we had a couple left,” he said.

A big hurdle that could not be overcome was working around and through some 60 different leases with the tenants that remain in the mall, he said.

Frew said his group’s purchase plan required that the entire mall close on the day of purchase except for anchor tenants J.C. Penney and Younkers and the empty anchor space that the Von Maur store once occupied. The group hoped to land a new tenant for each of the two floors in the former Von Maur store, he said.

Figuring out how to end existing leases in the mall’s smaller spaces proved too great a problem, he said.

“We needed more time to resolve and analyze all those leases,” he said.

Frew said the mall loses money every day as now configured, and he said his group had no interest in purchasing it to lose money.

“This thing bleeds money,” he said. “And we’re not interested in buying something that would lose money on the very first day.”

The plan was to close and demolish all but the anchor stores and to redevelop a commercial and residential village around them. In May, Frew pointed to the successful Streets at SouthGlenn in suburban Denver, Colo., as a model of transformation that his investment group hoped to accomplish at Westdale Mall.

Frew said his investment group’s interest in the Westdale project remains “extremely high,” and he said it is not unheard of for sellers of distressed properties and investors like his group to start all over with a new purchase attempt.

At the same time, he said the chances of that happening “are not great.”

Both Younkers and Penney’s have leases that run into 2015. Frew said the plan had been to have redeveloped around them before the leases came due.

“They want something to happen,” he said of the two anchor stores. “It’s clear to both that if nothing happens that’s not a good future for them.”

Frew said he understands that some of the small mall shops might be surviving even in the half-empty mall.

“But they’re on the Titanic,” he said. “Individually, some of those shops might do well. But collectively, it’s a sinking ship.”

The mall’s two owners are Tremont Capital Corp. of Oak Park, Ill., which owns most of the mall, and City Gate LP, Arcadia, Calif., which owns the anchor space that once housed the Wards store before it left the mall in 2001.

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