Planned mall buyer faces uphill struggle

December 12, 2007
AAC Management Corp., the company that has agreed to buy Lafayette Square Mall, faces big challenges reviving the flagging property, retail brokers say.

The 39-year-old northwest-side mall has lost customers and anchor tenants as new developments to the west and north have siphoned off affluent shoppers, brokers say.

"This is a roll-up-your shirtsleeves kind of property," a veteran retail broker said. "You have to go in, develop a plan, and work it."

Tenants have been notified by a New York-based brokerage firm, DTZ Rockwood, that owner Simon Property Group is selling the 1.2 million-square-foot property to AAC Management. AAC representatives who recently visited with tenants said the deal is scheduled to close Dec. 15.

Simon spokesman Les Morris would not discuss the matter. "Right now, we still own the mall," he said.

Information on AAC is sketchy. The firm, which is not a major mall owner, could not be reached for comment, and DTZ Rockwood officials did not return calls.

Lafayette Square Mall in recent years has lost anchors JCPenney and Lazarus, as shoppers flocked to new shopping centers, such as Metropolis in Plainfield and Traders Point on 86th Street. Remaining anchors are Macy's, Sears, Burlington Coat Factory and Steve & Barry's.

Simon said in a regulatory filing early this spring that occupancy was 81 percent.

An analysis of Indianapolis malls by the investment firm Friedman Billings Ramsey & Co. calls Lafayette Square a "tortoise," its weakest classification. "Small addressable markets, slow growth, and weak merchandising leave no redeeming qualities for tortoises," the firm said in its report.

Janet Saylor, co-owner of mall tenant Tropik Sun Fruit & Nut, said she is not optimistic about Lafayette Square's future. She said the lease for her business expires Dec. 31, and she will not renew.

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