Montgomery Mall Sold to Investment Group for $55 Million

After three months on the market, and two rounds of bidding, Montgomery Mall has been sold to a New York investment group for $55 million, according to Natalie Kostelni of the Philadelphia Business Journal.

A Montgomery County Court of Common Pleas judge recently approved the foreclosure sale to Montgomery Mall Realty Holdings, the entity used by Kohan Retail Investment Group of Great Neck, NY, according to the article. JLL arranged the sale of Montgomery Mall.

Kohan’s portfolio includes about 50 malls across the United States, such as Wyoming Valley Mall in Wilkes-Barre, PA, Washington Crown Center in Washington, PA, Clearview Mall in Butler, PA, Colonial Park Mall in Harrisburg, PA, and Lycoming Mall in Pennsdale, PA, as well as two hotels in New York City: The Gallivant Times Square and Shoreham Hotel, according to the report.

The 1.1-million-square-foot Montgomery Township property, which sits on 105 acres, was appraised at $57.6 million. In 2014, it was appraised at $195 million, according to the article.

The sale price was less than half of the $118.78 million judgement rendered against Mall at Montgomery, L.P. at the time of foreclosure in June.

According to the Philadelphia Business Journal, Mall at Montgomery, L.P, a Simon Property Group affiliate, defaulted on a $100 million loan in Fall 2020, and in July 2021, a Montgomery County Court of Common Pleas judge approved a mortgage foreclosure and directed the mall be sold to satisfy the loan, according to the article. In early June, Wilmington Trust, a trustee with Wells Fargo Commercial Mortgage, filed foreclosure documents to place the property in receivership.

Simon Property Group also owns King of Prussia Mall and has undertaken “friendly foreclosure” of some of its properties, according to the article. Even mall owner PREIT came out of Chapter 11 bankruptcy recently and relinquished ownership of the Fashion District Philadelphia.

In April 2014, Royal Bank of Scotland issued a $100 million loan backed by Montgomery Mall to Simon Property Group. The loan coincided with an $8 million renovation of the mall, which eventually brought Wegmans, a new exterior aesthetic and new retailers to the property. One month later, the loan was split into two notes, one for $54 million and a second for $46 million, according to the report.

Simon stopped making loan payments June 1, 2020, after six years, per the report. It went into default in August 2020, at which time they owed $118 million.

Last week, the North Penn School Board approved a court stipulation to settle the real estate tax assessment appeal between North Penn School District and Simon Property Group affiliate Montgomeryville Associates for three Montgomery Mall parcels, which decreased the total assessed value for the parcels from $81,564,716 to $26,386,960.

The mall is currently at 72.9% occupancy, anchored by Wegmans and Dick’s Sporting Goods. Recent difficulties at the mall include the February 2020 closure of Sears and ongoing struggles of Macy’s and JCPenney.

Peripheral restaurants Chili’s and TGI Fridays closed in April 2019 and February 2019, respectively

Built in 1977, Montgomery Mall received an $8 million renovation in 2014. At the time of the renovation, the mall appraised at approximately $195 million, or $176 per square-foot. However, an appraisal of the mall in August 2020 — the same month that the loan went into default — returned a value of only $61 million, or $55 per square-foot, according to the report.

See also:

Montgomery Mall Now Up for Sale, Expected to Sell for Less than Half of Loan Default, Report States

Montgomery Mall in Foreclosure After $118 Million Loan Default, Judge Directs Mall to Be Sold

Possible $100 Million Loan Default Could See Simon Property Walk Away From Montgomery Mall

Applebee’s in Montgomery Township Has Permanently Closed

Ruby Tuesday In Montgomery Township Has Abruptly, Permanently Closed