Tampa, Fla.-based DeBartolo Development has reached a preliminary agreement to buy Plainfield's Metropolis mall out of foreclosure and hopes to hook Macy's and Bass Pro Shops to anchor a second phase.
DeBartolo has a letter of intent with Atlanta-based Dominion Capital Management LLC to buy Metropolis and several other mall properties developed by Indianapolis-based Premier Properties USA Inc. Dominion, one of Premier's largest lenders, took control of the properties in April, shortly before Premier sought Chapter 11 bankruptcy protection.
Premier may have faltered, but the outlook for the 3-year-old, 600,000-square-foot Plainfield mall remains bright. Plans for a second phase could add up to 400,000 square feet to the mall, which now is anchored by JCPenney and Dick's Sporting Goods.
"They're going to do a wonderful job," said Bill Armstrong, general counsel for Dominion Capital, which has a consulting agreement with DeBartolo that likely will evolve into a deal to buy most of the real estate developed by Premier. The troubled firm had control of six major shopping centers in six states.
DeBartolo already is working on site plans for Metropolis and plans to recruit tenants at the International Council of Shopping Centers convention in Las Vegas May 18-21, Armstrong said. It also will be looking at tenants for former Premier properties in Ohio, Florida, Pennsylvania and Virginia.
Anchor retailers talking with DeBartolo about the expansion of Metropolis include Missouri-based outdoors giant Bass Pro Shops, which has stores in Clarksville and Portage, and Cincinnati-based Macy's, which has a store about 14 miles northeast of Metropolis at Lafayette Square Mall.
Bass Pro Shops Outdoor World stores typically exceed 100,000 square feet and draw customers from a wide regional area. As for Macy's, it isn't clear whether the retailer would continue to operate at Lafayette Square if it opens at Metropolis. JCPenney closed its Lafayette Square store after opening in Plainfield.
DeBartolo is a familiar name in development circles. The late Edward J. DeBartolo Sr. is widely credited with inventing the enclosed shopping mall in the 1960s. He sold Youngstown, Ohio-based DeBartolo Realty Corp. to locally based Simon Property Group Inc. for $3 billion in 1996.
DeBartolo's son, Edward Jr., is chairman of several companies, including DeBartolo Development, and previously owned the NFL's San Francisco 49ers and the NHL's Pittsburgh Penguins.
DeBartolo Development has 12 projects in construction and 36 in its pipeline, said Don Nicholson, the company's director of construction.
The firm is assisting Dominion on several Premier properties, negotiating with other creditors on finished properties and those still under construction. DeBartolo has been adding staff to keep up with the demand, Nicholson said.
Dominion and DeBartolo hired real estate management and brokerage firm CB Richard Ellis to manage Metropolis and other properties. The company has stabilized Metropolis after it went several weeks without management or security, said Gordon Hendry, CB's director of asset services.
"Basically, you had zero management of the property, a major shopping mall, for six weeks," he said.
Metropolis helped put Premier Properties on the map. Few believed the fledgling development company led by Christopher P. White could pull off the $120 million project in an unproven retail area. But the gamble paid off handsomely, proving both Premier and Plainfield deserved a seat at the grown-up table.
Eventually, Premier's risky bets, coupled with tighter credit markets, led to a mountain of financial and legal troubles. The firm laid off most of its staff and filed for Chapter 11 bankruptcy protection in April.
Metropolis remains a strong draw for retailers, thanks to solid job and income growth in the area and momentum from the new Indianapolis International Airport terminal, said Bill French, a senior vice president and retail expert with the local office of St. Louis-based Colliers Turley Martin Tucker.
French said most retailers have locked down expansion plans for 2009, but he wouldn't be surprised to see new anchors target Metropolis for 2010. The mall, he said, has created enough retail density to draw the big names to Plainfield.