So now we know the buyer of Broadway Mall in Hicksville, NY, what had been Vornado Realty Trust's last shopping center holding on Long Island. Private equity KKR has announced that on behalf of its clients and affiliates including its own KKR Financial Holdings LLC, it acquired the mall for $94 million in partnership with Broadway Mall Pacific (a partnership between Pacific Retail Capital Partners, Clifton Realty and Peter Fair of Continuum Partners).
In other words, what had been a mall owned by a public company has now gone private. These days, that's not all that unusual – REITs routinely go through their portfolios and sell off the weaker properties, often to privately held owner/managers who specialize in turnarounds.
Despite its location in a greatly underserved and affluent market in Nassau County, Broadway Mall fits the definition. The 1.1 million-square-foot center produced approximately $300 million in sales last year, according to the KKR announcement. But it is 92.6 percent occupied and is home to the only IKEA in the county.
“Broadway Mall is an institutional quality asset in an irreplaceable location within a strong trade area. With a targeted capital improvement program and a revamped leasing strategy, Broadway will be a more attractive home for current and prospective retailers in Long Island. Broadway has almost 60 years of history operating in the Long Island community, and our goal is to make the shopping experience even better than it is today," said Ralph Rosenberg, a KKR member and global head of real estate.
More significantly, the mall is KKR's third regional mall investment since 2011. Last year, it was part of an investment group that acquired Colonie Center in Albany, N.Y., and in 2012 with the same partners bought Yorktown Center in Lombard, Ill. It also has entered the expanding outlet sector, acquiring the Legends Outlets Kansas City at auction last year.
Clearly, KKR has decided that retail real estate is a worthwhile investment. Could this be a small reversal of a 20-year trend toward public ownership of major malls?
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