Bankruptcy could bring big changes to East Hills Mall
| Saturday, Dec 12 2009 03:00 PM
Last Updated Saturday, Dec 12 2009 03:00 PM
Longstanding plans for revitalizing East Hills Mall have hit yet another snag. But this one -- the owner's Chapter 11 bankruptcy filing last month -- may lead to a sale that could bring about substantial changes, possibly even demolition and redevelopment of the troubled property.
Last month's debt reorganization filing by the mall's Los Angeles owner follows a series of big-name store closures at East Hills. Mervyns and Gottschalks, which had two large spaces at the mall, are gone. That means some shoppers now have fewer reasons to go there.
What comes next is unclear. An East Hills representative said staff there continue to try to attract new tenants and host activities intended to generate foot traffic.
"We're not giving up. We're still here," mall business development director Anne Lynch said Friday.
But with the 178,000-square-foot northeast mall on the auction block, the owner's delayed plans for investing in interior upgrades appear as uncertain as ever.
On the other hand, a sale could turn the mall into a kind of blank slate offering future owners a number of options.
CB Richard Ellis, a commercial real estate brokerage marketing the property, has put out a flyer describing East Hills as an "excellent reposition opportunity, offering an investor an outstanding opportunity to create value in an existing asset" that is already approved for physical improvements.
The mall's former general manager, Tommie Sparks, said that bringing in new anchor tenants could be the best hope for revitalizing the mall. Problem is, the largest spaces are owned by separate companies that she said are not working together in the mall's best interest.
Demolition of the site could solve that, she said.
"In order to redevelop that property, you would have to ... get those people together and get some kind of cooperating effort to tear that thing (down) and build something else there," Sparks said. "That's what needs to be done."
Not everyone agrees. Nick Danesh, head of the mall's ownership entity, BH Mall LLC, said he hopes to keep the mall, bring in new anchors and invest in interior and exterior improvements.
But his challenges are many, including money owed to him by former tenants, and the tough economy in general, which he said has prompted him to lower rents "practically to nothing."
"The economy just turned on me," he said. His bankruptcy filing refers to debts between $1 million and $10 million, and assets between $10 million and $50 million.
Tenant Erika Dixon is holding out hope that the mall will survive as it is. She is among the owners of Skull Harbor, an elaborate pirate-themed party venue at East Hills.
Although her business depends less on foot traffic than other stores there, her partners and she could lose a big investment if the mall were to close.
"I know that we continue to advertise as much as we possibly can to bring people in to our site," she said, "and we're optimistic as well that it's going to do fine and it's going to sell."
