About 30 stores, including Kohl's and Sears, will stay open as owners of what was once a thriving mall "test the water" for buyers.
After years of carrying heavy debt while losing shoppers and three of its four anchors, Brookdale Center is scheduled to go on the auction block at a sheriff's foreclosure sale next month.
The move doesn't mean the 47-year-old mall, the second oldest of the Twin Cities "Dales," is closing. It will allow potential buyers to step forward and, if there isn't a deal, let senior lenders gain title to the property.
Sears, the sole remaining anchor, and Macy's, which closed in March, own their sites and won't be directly affected by the auction, set for Jan. 15, officials said. Spokeswomen at Sears and Kohl's, which has a store on a mall outlot, said they plan to remain open. About 30 other stores and kiosks are operating and also are expected to stay open.
Still, the scheduled foreclosure sale is a sign of just how far the mall has fallen. Even in the dismal commercial real estate environment of the past year, Brookdale stands apart. In addition to Macy's, another major tenant -- Barnes & Noble -- closed shop in June, pushing the vacancy rate to more than 50 percent.
"The mall has suffered from 20 years of inattentive ownership," said Jim McComb, a retail real estate consultant familiar with Brookdale. "It is a tragic history for a fairly decent mall."
He said that senior lender Capmark Finance has been trying to sell Brookdale.
Documents in Hennepin County District Court list Brooks Mall Properties, of Coral Gables, Fla., as the borrower on a $54 million mortgage. In addition to Capmark, two other senior lenders are listed: Urban Development Fund II LLC and Paramount Community Development Fund LLC, both incorporated in Delaware.
The auction notice published recently in a financial newspaper said that about $50 million is due on the mortgage. Sheriff's Lt. Clifford Ahlgren said Brookdale is one of the largest properties he has seen listed for a Hennepin County sheriff's auction.
Repeated calls to attorneys for Brooks Mall Properties and Capmark were not returned.
'Test the water'?
Brooklyn Center City Manager Curt Boganey, who said the city was not told of the sheriff's sale, said that auctions can be an effort to "test the water" by lenders to see whether anyone is interested in buying. He noted that they often are canceled or postponed until the lender finds an acceptable price.
McComb said if lenders can't find a buyer, they often purchase the property, in effect paying themselves and gaining a clear title. He said Capmark isn't a developer, so it would be likely to sell the mall to someone else.
McComb and Dick Grones, another retail realty specialist, said they thought that when a new owner emerges, it would demolish the mall and build new retail stores.
Grones, a partner of Cambridge Commercial Realty, said he thinks retail mixed with housing and possibly a medical clinic could be built at Brookdale. However, he and McComb said that the mall operating agreement allows Sears to stop a competing retail business. McComb said Wal-Mart had expressed interest in locating at the mall a few years ago, but Sears derailed it.
Grones noted that per-capita income has dropped in areas around Brookdale, resulting in less affluent mall shoppers. He said development of the Maple Grove shopping area has created the equivalent of a regional mall that has attracted Brookdale shoppers.
"It's new. It has bigger, brighter boxes with more high-end tenants and restaurants and theaters to draw shoppers," Grones said.
McComb, who worked for Dayton Hudson when it owned Brookdale, said it is the second oldest of the Dales after Southdale. Brookdale has been hurt by a lack of investment, although some renovation was done in the 1990s by a former owner, he said.
Fond memories, cautious hope
One day this week, about 30 people wandered around the mall shortly before noon as holiday music wafted through the halls. A faux fireplace (but no Santa) and a dozen or so holiday trees dotted halls and courtyards.
"I used to come this time of day and people were all over the place," said Doug Peterson. He said his walkers' group has to bring its own coffee since Taco John's closed this fall.
"This place was really humming," he said. "It is too bad; it is a beautiful mall."
Kathy O'Day grew up shopping at Brookdale in the heydays of Dayton's, Donaldson's and J.C. Penney.
"Our family came out here, and we all enjoyed the mall so much," she said. "They had a Christmas cheese shop and it was so festive. This was a really nice shopping center."
Gary Eitel, Brooklyn Center's business and development director, said he's been in touch with commercial developers who have ideas for the mall but need banks or others to invest in their proposals.
"They are positioning themselves for future opportunities. We still have a market of 30,000-plus people who reside in Brooklyn Center," Eitel noted. He said the city is expanding trails to the mall and landscaping major roads around the 80-acre site to "make this an attractive-looking investment opportunity."
Staff writer Susan Feyder contributed to this article. Jim Adams • 612-673-7658