BRADENTON — A New York firm known for rehabbing retail centers has purchased the DeSoto Square mall, with plans to restore traffic at the aging Bradenton shopping center with a facelift and heightened security.
Mason Asset Management acquired the county’s only indoor shopping mall for about $25 million from Simon Property Group Inc., which let its $61.9 million loan on the property fall into foreclosure this year, records show.
Mason will own and operate a 492,997-square-foot portion of the 639,094 mall on Cortez Road, which represents all but the Sears department store. Mason plans to retain the present mall management and existing leases executed with Simon.
“We feel this was an exciting opportunity because there is still life at the mall,” said Mason Asset President Elliot Nassim, who was in town meeting with tenants Monday. “It is just a good example of the previous owners neglecting it. We plan to come in and roll up our sleeves.”
Simon, the world’s largest owner of shopping malls, offered to hand the property back to its lender this year after the $61.9 million mortgage hit foreclosure in March.
Prior to the sale, the massive company had been delinquent on its payments for more than a year, according to records from Trepp LLC, a real estate analytics firm.
The $25 million paid by Mason last week represents just a fraction of the total debt that had been on the property and equates to a purchase price of about $50 a square foot.
At the height of the real estate boom in 2004, DeSoto Square was valued at $80.2 million, property records show.
Representatives from Simon declined to comment on the sale.
“This is a viable mall — when you look around, there’s not many vacancies,” Nassim said. “When you don’t put money back into the mall, the shoppers sense that. We’re going to try and give the customers what they want.”
DeSoto Square was first built in 1973 and later expanded in 1997. Simon Property acquired the shopping center in August 1996.
But over the years, the mall fell into disrepair as routine maintenance went unaddressed and the aesthetics were never upgraded. As a result, average rents plummeted.
Simon collected $5.05 million in base rent at DeSoto Square last year, leading to $6.7 million in total revenue. That’s down from $8.3 million in 2009 and $9.5 million in 2008, according to Trepp.
The mall’s net operating income also has shrunk each year since 2008, sliding to $4.2 million in 2011. An estimated 75 percent of DeSoto Square’s existing leases expire within 24 months.
DeSoto’s anchor tenants now include Macy’s, JC Penney and Sears.
Mason plans to immediately give the mall a facelift, starting with improved parking, more signage and a new surveillance security system. Part of that plan also will be to give the center a more open feel.
The company also is in talks to bring a sheriff’s substation to the mall, an education related program and a replacement for the now vacant Dillard’s store. Nassim said he’s not too concerned about the ramifications of the 115-store University Town Center — an upscale shopping mall to line the Sarasota-Manatee border, where the early stages of construction are now underway.
“We’re not afraid of them,” he said. “There’s enough room for both.” Based in Great Neck, N.Y., Mason owns and manages about 50 retail centers in the U.S. DeSoto Square became the company’s first in Florida.
The private, family-owned firm specializes in the reinvestment of retail centers, turning around many that had been struggling prior, Nassim said.
Retail industry experts see the change of hands as a good sign for the future of DeSoto Square, which remains the only true indoor shopping mall in Manatee County.
“I’m sure it can be turned around, mainly because of the lack of competition,” said Patrick Berman, senior director of the retail brokerage at Cushman & Wakefield of Florida Inc. “You have to draw a seven-mile circle around the mall before you get to another competitor. You have a quarter-million people living in that ring. That’s huge.”
Berman said the final close price for DeSoto Square fell right in line with the market. The comparable 440,000-square-foot Seminole Mall near Tampa Bay sold for $15 million earlier this year, he said.
Others say a rejuvenation at DeSoto Square will need a repurpose of some of the tenants and fresh look at the market.
“They have to spend some money on lighting and opening it up to the community in many ways,” said Anthony Mazzucca, managing director of NAI Manasota, an area commercial brokerage. “But, absolutely it has potential.”
Josh Salman, Herald business writer, can be reached at 941-745-7095. Follow him on Twitter @JoshSalman