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Boulevard Mall escapes foreclosure through $97 million sale

The Boulevard Mall, the oldest enclosed shopping mall in the region, has a new owner after Forest City Enterprises gave up control rather than go through a foreclosure.

But there aren't likely to be any changes for shoppers and tenants in the near future.

Forest City, which was facing a legal seizure after defaulting on its $92 million loan, turned over the deed on the Amherst mall to LNR Partners. The Miami-based company, which is known as a "special servicer," held the mortgage on the property on behalf of Wall Street investors, and had been negotiating with Forest City to collect on the troubled loan.

Now, LNR will seeking to preserve and maximize the property's value for those investors until it can resell the mall to a new owner and recoup its losses on the loan.

Zamias Services, a national property management company based in Johnstown, Pa., will serve as the new management and leasing company for the mall, the company confirmed to The Buffalo News late Monday afternoon.

Zamias, which was the developer and original owner of the McKinley Mall in Hamburg, expects everything to continue as it is at the Boulevard Mall, according to a company representative.

Like other mall tenants, Laux Sporting Goods manager Joe Eckl is hopeful the transaction will be a good thing for retail tenants. LNR Partners would likely want to make the mall as attractive as possible to potential buyers. That would mean taking good care of the mall and its tenants.

"You can't sell a mall that's struggling. You want it to be well kept. You want it to be successful," Eckl said.

On paper, the transaction was recorded in the Erie County Clerk's Office on Friday as a deed in lieu of foreclosure for $96.8 million, with LNR buying the property through a limited-liability company called GCCFC 2007-GG9 Niagara Falls Boulevard LLC. The original loan was made by Greenwich Capital Corp., or GCC, and was packaged for sale on Wall Street in 2007.

The transaction was valued at nearly $97 million, the amount of debt on the property, but no money changed hands in the deal that wasn't conducted at arm's length.

The deed indicates the assessed value of the 62.4-acre property at 1285 Niagara Falls Blvd. is $53 million.

The town Assessor's Office shows the six mall parcels that are owned by Forest City entities have a combined assessed value of $60.8 million. That doesn't count the former Macy's Men's Store that is owned separately.

The sale contract closed on Nov. 22, according to the deed.

Representatives from LNR Partners, the Boulevard Mall and Forest City did not respond to requests for comment Monday.

The owner, Forest City, which built and opened the sprawling Amherst shopping center in 1962, had put it up for sale in July 2016. In February, Forest City defaulted on the $92 million loan payment it was required to make, a payment that is far higher than the value the Cleveland-based company had assigned to the mall.

Boulevard Mall owner defaults on loan; could mean foreclosure

The mall, which was renovated or expanded in 1978, 1981, 1994, 1997, 2000 and again in 2015, is located at Niagara Falls Boulevard and Maple Road.

At the time of the listing, it was anchored by two Macy’s stores, JCPenney, a two-story Sears, Buy Buy Baby, Michael’s, H&M and a new 55,000-square-foot Dick’s Sporting Goods. Since then, Sears closed and Macy's Men's closed its store and moved into its main Macy's store in the mall. Benderson Development Co. bought the Macy's Men's Store in the mall.

"Any new direction for the property will benefit both the former Macy's that Benderson purchased as well as the Sears building that we are marketing," said David L. Schiller, an associate broker with Cushman & Wakefield Pyramid Brokerage, which was retained by Sears to find someone to sublease its Boulevard Mall location.

Benderson buys Macy's Men's Store property at Boulevard Mall

In all, the mall has more than 100 stores, kiosks and restaurants. The Dick’s replaced the mall’s food court, including a popular carousel. The mall has 962,091 square feet of total space and 336,000 square feet of gross leasable space.

According to the CBRE brochure, the mall’s annual net operating income is $8 million, with average annual sales for permanent mall retail tenants of $339 per square foot. And there’s a population of 323,312 people within a five-mile radius, with an average household income of $67,086.

Made in America store owner Mark Andol said it has been business as usual at the center despite the mall's financial troubles. Sales have remained steady, management has been fair and responsive, and the center has been well maintained.

"I visited on Black Friday and I was pleasantly surprised," he said. "As a consumer walking in, you wouldn't know anything was going on."

Andol said it gives him "peace of mind" that a new owner might keep Boulevard Mall an enclosed shopping center, invest in the space and attract new tenants.

Retailers widely praised mall manager Brian Calvert, and said there was only so much he could do with a possible foreclosure hanging over the mall.

"His hands were tied. Nobody wanted to invest in the mall if they weren't sure it was going to stay open," said Larry Silver, owner of Book Outlet and More.

As more consumers turn to the internet to do their shopping, and anchor department stores such as Sears and Macy's close hundreds of stores, malls have found they owe more on their loans than their properties are worth.

Many of those mall owners have chosen to walk away from upside-down loans and let their properties go into foreclosure. Some, like the Rolling Acres Mall in Akron, Ohio, have been bulldozed to make way for strip malls or other real estate uses. Others have been re-imagined as lifestyle centers, incorporating living spaces, offices, and grocery stores among the shops. The Eastern Hills Mall, in Clarence, is in the process of doing just that.

News Business Reporters Samantha Christmann and Jonathan D. Epstein contributed to this report.

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