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Fate of Boulevard Mall unknown as loan repayment deadline looms

Monday looms as a key deadline in the future of the Boulevard Mall.

It’s the day the mall’s owner, Forest City, must pay off the more than $90 million remaining on its loan.

And that’s millions more than the value that Forest City puts on its property in Amherst.

Forest City has cut the value it places on the mall property by 44 percent, or $52.5 million, from $118 million to $65.6 million, according to a quarterly filing with the U.S. Securities and Exchange Commission.

The company’s 10-year loan on Boulevard Mall, current as of October, is due in full by Monday, under the maturity terms of the original loan. LNR Partners of Miami Beach is now in charge of the debt.

What will Forest City do on Monday?

Brian Calvert, the mall’s general manager, said he couldn’t comment and referred questions to Jeff Linton, a Cleveland-based spokesman for Forest City. Linton did not respond to messages seeking comment.

Still, for shoppers, nothing is likely to change in the coming days and weeks at the region’s oldest enclosed shopping center.

But the repayment deadline is only the latest key development in a period of significant upheaval at Boulevard Mall. There’s also these challenges:

• Forest City has listed the mall for sale since last summer, apparently with no takers yet.
• A number of retail tenants have left the mall over the past 18 months. The biggest blow came in late December, when anchor tenant Sears announced it would close its store by April.
• The company in July filed a court challenge to the assessment on most of the parcels that make up the mall property.

In interviews this week, retailers and store managers say the mall may be struggling, but they had an impressive holiday sales season considering all of the challenges.

In interviews this week, retailers and store managers say the mall may be struggling, but they had an impressive holiday sales season considering all of the challenges.

"I wouldn't want to single this mall out. They're all struggling. It's all bricks and mortar," said Al Olczak, manager of the Made in America store in the Boulevard Mall. Nonetheless, Olczak said his December sales at Boulevard Mall showed a solid increase over December 2015, their first December in the mall.

The Boulevard Mall is in a difficult position because it sits just to the south of the Boulevard Consumer Square – with Lowes, Target, Best Buy and Barnes and Noble – and just to the north of the former Northtown Plaza, where WS Development is putting in a Whole Foods and has plans to lure other national retailers.

Other malls are struggling, too, as longtime anchor tenants close down and consumer tastes change. Eastern Hills Mall, for example, is trying to reposition itself as a "lifestyle center" with higher-end stores, office space and possibly even a hotel.

"The traditional shopping centers and malls are under siege across America," said Burt P. Flickinger III, managing director of New York retail consulting firm Strategic Resource Group.

More people than ever are buying things online, eschewing visits to enclosed shopping centers, for example.

Even regular Boulevard Mall shoppers don't say they come because of the thriving, commercial energy there.

"There's not that many lines at the registers. It's an in-and-out situation," said Kaylyn Billups, of Buffalo, a life skills trainer who primarily works with adults with autism. She added, "I would say this is a nice place to walk. Like, if you were going for a stroll in the park."

The question is what the Boulevard Mall will look like next year, or five years from now.

"That location is prime real estate," said Steven D. Sanders, the Amherst deputy town supervisor and a member of the Amherst Industrial Development Agency board. "Somebody is going to say, 'I've got a great idea for what we can do with this.'"

Sears is closing its store at the Boulevard Mall in Amherst. The mall's owner, Forest City, has a $92.4 million mortgage payment due Feb. 6. (John Hickey/News file photo)

"It's got to be repurposed," said Colleen DiPirro, president and CEO of the Amherst Chamber of Commerce. "It's a prime piece of real estate, in a great area, with great demographics."

Built in 1962, the Boulevard Mall has 962,000 square feet of total space, including 385,000 square feet of leasable space. It was 93 percent occupied as of June, according to commercial mortgage data research firm Trepp LLC, the most recent figures available. That will change, of course, once Sears moves out this spring.

The mall's anchor stores include JCPenney, Macy's and Macy's Mens, the outgoing Sears store, Michael's, H&M, Bed Bath & Beyond, and a new Dick's Sporting Goods store, which replaced its former food court.

According to data from Trepp, its net operating income has fallen from $12.4 million in 2005 to $8.6 million, while net cash flow is down from $9.6 million in 2007 to $7.9 million now.

Forest City acquired a 50 percent ownership in the mall in 1996, and then bought out its partners in December 2014 for $9 million. The company, based in Cleveland, listed the mall for sale last July, saying it was a difficult decision but part of the company's move to focus on high-quality assets in core markets.

Forest City did not list a price for the mall and has not provided an update on the sale process.

Meanwhile, Forest City is also challenging the assessment on four of the seven parcels that make up the mall property. The challenge, known as an Article 7, was filed in July in State Supreme Court. The assessment on all seven parcels, at full market value, is $64.5 million, said David C. Marrano, Amherst's town assessor. The challenge, which the town is fighting, remains active, Marrano said.

Inside the mall, retailers said the 2016 holiday shopping season more than lived up to their expectations.

"For me, it was actually pretty good. I have a lot of returning customers," said Adi Yaacov, who operates Legz, which has a kiosk selling colorful women's leggings at the Boulevard Mall. During the holiday shopping season, he expands to sell deerskin gloves from kiosks at the Boulevard, McKinley and Eastern Hills malls.

But retailers acknowledged the mall faces challenges from outdoor shopping centers, online shopping, the weak Canadian dollar and the loss of Sears and other retailers.

"Retail in general is much slower. It's getting tougher and tougher. You need to have a good product at a good price," Yaacov said. "I think the Canadian money is much lower than it used to be a few years ago, and that hurts. It's a combination of a lot of things together."

There is an upside to some of the turnover in the mall, Yaacov said. He said it could give him a chance to move Legz from his longtime kiosk location to in-line store space at a more affordable rent.

Flickinger said the fate of the mall is to a large extent tied to how it fills the pending Sears vacancy and to the success of the marketing campaigns carried out by its remaining anchor tenants, Macy's and JCPenney.

Can the mall, Flickinger asked, draw a Lidl grocery store? The European chain is starting to expand in this country, and bringing one of its supermarkets to the Sears space would be an aggressive move to take on the nearby Walmart, Wegmans, Trader Joe's and Whole Foods, he said.

"It would be a respective and collective nightmare for all of them," Flickinger said.

But, Flickinger warned, losing Macy's or JC Penney would be a severe blow to the mall's fortunes. "Then, a lot of hope is lost," he said.

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