BRADENTON — An unnamed buyer has signed a letter of intent with Simon Property Group to acquire the DeSoto Square mall in Bradenton, according to a commercial real estate analytics firm.
Simon officials Tuesday confirmed the mall is up for sale but refused to discuss details.
Simon’s $61.9 million loan on the 492,997-square-foot portion of the shopping center it owns slipped into danger of imminent default in 2010. At that time, Simon hired legal counsel and offered to hand the property back to the bank, records from the Trepp real estate database show.
Simon has listed the property with CBRE, a giant commercial real estate broker with a presence in Tampa.
The 639,094-square-foot mall on Cortez Road was first built in 1973 and later expanded in 1997. Simon Property, the largest U.S. shopping mall owner, acquired the property in August 1996.
DeSoto Square was appraised at $80.2 million during the height of the real estate boom in 2004. The mall only is worth an estimated $43.1 million today, according to Trepp records.
Details about the purchase price and debt agreement negotiated as part of the letter of intent signed this month are not known.
In addition, this month the appraisal reduction amount on the loan was increased to $24 million, up from $15.6 million in April. This has often proven to be a telling sign that either a sale or loan modification is near, Trepp said.
Commercial brokers handling the transaction for CBRE declined to comment. They’re attending the International Council of Shopping Centers’ annual leasing conference in Las Vegas.
A mall spokesman also would not elaborate on the deal.
“We can’t publicly comment on any of the purchasing or selling of our malls,” Simon spokesman Les Morris said. “It’s just not a subject we talk about.”
Simon reported $515.6 million in operating income for the first quarter that ended March 31, a 14 percent increase over the same time last year.
Those earnings equated to $2.18 per share, according to an April filing with the Security Exchange Commission.
Simon also owns the Ellenton Premium Outlets in Manatee County, which the company purchased in 2009 along with 21 other outlet centers across the U.S. in a $2.3 billion deal.
Most vendors at DeSoto Square said Tuesday they hadn’t heard anything from mall management about a potential sale other than the constant rumors that have been swirling for a decade about a potential ownership change.
Most shop owners agreed the mall would be best served with a much-needed facelift and complete rebranding. Nobody knows what to expect next.
“The perception of the mall is not so good,” said Steve Holt, owner of Beaming White, a teeth cleaning service with a kiosk in DeSoto Square. “We need to tell the community it’s a safe place and give the people who have been disillusioned a reason to come back.”
Holt also rents a booth at the Red Barn Flea Market, where he pays more for rent than at DeSoto Square.
The mall has seen its traffic taper off significantly as a result of the recession along with a high turnover of retailers and lots of vacant storefronts.
A thin stream of patrons passed through the mall Tuesday.
“I have been here for four years, and nothing has really changed,” said Bert Mendez, manager of Tags Galore. “Business has been tough. It’s a waste of time sometimes.”
Three years ago, the former manager of DeSoto Square asked a group of local business leaders to help formulate a strategy for improvement. The committee recommended ideas ranging from new sign placement to fresh paint and landscaping.
But the group dissolved after just a few meetings because Simon executives refused to engage in the discussion, said Bob Bartz, president of the Manatee Chamber of Commerce, who served on the committee.
“We wanted to make it more inviting, and we came up with some simple, inexpensive improvements that could be done to accomplish that,” Bartz said. “It just fell apart when Simon wouldn’t come down and talk to us.”
Many store owners fear the slump only will increase if the proposed 115-store University Town Center upscale shopping mall opens in a few years, attracting customers from Lakewood Ranch and South Manatee. The mall’s three anchors will include a Sak’s Fifth Avenue, Macy’s and Dillard’s.
DeSoto Square retailers also were concerned that new ownership could completely force them out of their businesses should it decide to raze the building to make way for something new.
Green Street Advisors, which tracks real-estate investment trends, made a prediction to the Wall Street Journal this year that 10 percent of U.S. malls will be remade or bulldozed into something else within the next decade.
“I think the recession has hurt businesses more than the mall itself,” said John Petrovic, owner of Legends In Sports, which has been located at the mall for 12 years. “There’s definitely less traffic, but I have my regulars who make up the difference.”Josh Salman, Herald business writer, can be reached at 941-745-7095. Follow him on Twitter @JoshSalman