Thursday, December 2, 2021

Kohan Picks Up 1.1 Million-Square-Foot Montgomery Mall Near Philadelphia

 By Mark Heschmeyer CoStar News

Kohan Retail Investment Group, a specialist in investing in troubled malls and shopping centers, has acquired the six-property, 1.1 million-square-foot Montgomery Mall in North Wales, Pennsylvania.

The purchase starts a new chapter for the mall that was owned by Simon Property Group through the first half of 2021.

Kohan bought the mall from LNR Partners, a commercial mortgage-backed securities special servicer that took possession of the property in July through a negotiated foreclosure with Simon, according to CoStar CMBS data. LNR then put the mall up for auction in August.

Kohan was selected as the preferred buyer and paid $55 million, or about $56.50 per square foot, in late November. The mall was appraised at $195 million when it was refinanced with $100 million in CMBS financing in 2014.

The super-regional mall located halfway between Philadelphia and Allentown, Pennsylvania, was among the centers nationwide hard hit by the COVID-19 pandemic. Simon defaulted on loan repayments in summer 2020 and worked with LNR for a year on the eventual outcome, according to CMBS data.

Bond rating analysts from DBRS Morningstar visited the mall twice in July and noted on both occasions that there was minimal activity, except near a Wegman’s supermarket and a Dick’s Sporting Goods store.

“The exterior is dated, and parts, especially around the now-vacant Sears, are fairly desolate. Foot traffic in the inline space was virtually nonexistent,” DBRS analysts noted in a surveillance report published July 30. “There are large swaths of vacant space along the inline space and among the kiosks. A number of the vacant inline spaces now have vending machines stationed in front of them.”

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