business

Woodbury Lakes, the high-end mall that went back to the lender last year, has been sold -- back to one of its original developers.

A joint venture called DBRA RED Woodbury closed on the deal Tuesday, one of the partners confirmed. While terms were not disclosed, the price was said to be just north of $30 million.

DBRA RED Woodbury is a joint venture of Fortress Investment Group, a large publicly traded alternative asset manager in New York, and RED Equity Partners, part of retail developer RED Development in Kansas City, Mo., and Phoenix.

The 305,303-square-foot mall, about 75 percent leased, sits along Interstate 94 at Radio Drive in Woodbury. It's one of the stylish, outdoor "lifestyle centers" that proliferated during the housing boom and is home to trendy shops such as Aeropostale, Banana Republic and Trader Joe's.

The struggling mall has been a point of interest among brokers who have viewed it as something of a case study for a mall that "didn't work," said Ned Rukavina, senior vice president at NorthMarq.

Woodbury Lakes was developed by Opus Northwest and RED Development, the same duo that developed the Shoppes at Arbor Lake in Maple Grove.

Woodbury Lakes opened in 2005. Cornerstone Real Estate Advisors in Hartford, Conn., bought it the following year for $99 million, or about $324 a square foot -- a rich price for a mall that size, brokers say, particularly since it was only about 80 percent leased. But the recession throttled the mall -- it lost a key anchor, Linens 'n Things, and another major tenant, Z Gallerie, when those companies filed for bankruptcy. An article this spring in the trade magazine Retail Traffic about the trials of lifestyle centers nationwide suggested that Minnesota's weather might have played a hand in Woodbury Lake's woes.

Local retail real estate specialists say there were other factors at play. For instance, Woodbury doesn't have the same density of well-off shoppers within a 5-mile radius of Woodbury Lakes as does the more successful Shoppes of Arbor Lakes.

Last fall, owing about $65 million on the loan, Cornerstone gave the property back to the lender in a deed-in-lieu-of-foreclosure. NAI Welsh, the brokerage arm of Welsh Cos. in Minnetonka, was hired to sell the property. Bob Pounds and Tim Prinsen, both senior vice presidents at NAI Welsh, handled the sale.

Pounds called the new owner an "active, engaged and well-capitalized investor": "The only issue the property has in my opinion, is that it just needs to be leasing," he said. "It's a beautiful property."

Pounds said RED will ultimately manage and lease it.

Paul Skram, the mall's general manager, said he was excited by the sale. "I think the tenants will be happy because RED has got the national contacts," Skram said.

Rukavina said the new owners have some work ahead, particularly to attract a substantial new anchor.

"It definitely needs to be turned around," he said, adding that the mall needs to be "more of a destination."

Jennifer Bjorhus • 612-673-4683