Baltimore's political and business leaders praised the New York-based real estate investment firm purchasing
When it was announced last month that Ashkenazy Acquisition Corp. was eyeing Harborplace, Mayor
"These are places that are destinations," Rawlings-Blake said. "To me, that suggests what's coming in the future. We want to make sure Harborplace continues to be a destination. They create premiere destinations across the country."
But not all of Ashkenazy's downtown shopping venues have succeeded. Two major investments — in Milwaukee and
Michael Alpert, Ashkenazy's president and vice chairman, said this week that he does not see similarities between Harborplace and the two urban malls that were pushed out of Ashkenazy's portfolio.
In an interview with the
The private investment firm has acquired over 13 million square feet of retail, office and residential properties in North America, valued at about $5 billion, according to its website. In addition to shopping centers, Ashkenazy's portfolio includes the Barney's department stores in New York and Beverly Hills, several office towers on Madison Avenue and a few buildings on North
Ashkenazy purchases each of its properties through a separate company, insulating the parent firm from liability. Ben Ashkenazy, the firm's chairman and CEO, is affiliated with dozens of companies used to buy properties. He bought his first property at 17, according to the New York Daily News. He's now in his early 40s.
Alpert declined to disclose to The Baltimore Sun how much Ashkenazy is paying
Chicago-based General Growth, which also owns The Gallery mall across Light Street from Harborplace, has been selling off assets since emerging from bankruptcy in 2010. Its other Baltimore-area properties include The Mall in Columbia, Mondawmin Mall in West Baltimore,
"I don't want to get deep into initial thoughts" about Harborplace's future, which Ashkenazy is "very excited" about, Alpert said. "We're focused on closing," he said, adding that Ashkenazy will take time after the purchase for "understanding the opportunities, and then come up with a plan."
Although the commercial real estate market is beginning to pick up again, it is still far from its status when Ashkenazy was making plans several years ago for its newly acquired properties in Milwaukee and Tampa.
In 2005, an Ashkenazy-backed investment group called Grand Avenue City Mall LLC bought the Shops of Grand Avenue in downtown Milwaukee for $31.7 million, according to court records and news reports.
The two-story mall is a block from the Milwaukee River, which runs through the center of downtown, and is within walking distance of many office buildings. It is anchored by a Boston Store department store and a T.J. Maxx. It opened in 1982 — two years after the Rouse Co. opened Harborplace — part of the early-1980s trend toward downtown revitalization.
By the end of 2009, as recession gripped the nation, just a little over 50 percent of Grand Avenue's space was occupied, according to the Journal-Sentinel. According to Fitch Ratings, the low vacancy rate at the end of Ashkenazy's tenure was largely due to retailer Linens 'n Things' bankruptcy. "The borrower was unable to re-tenant the former Linens 'n Things space, triggering many co-tenancy clauses and increasing vacancy, as tenants exercised their contractual rights to vacate their spaces," Fitch said.
After failing to pay off one of its loans on the property, Ashkenazy lost control of the mall in 2010, the Milwaukee Journal-Sentinel reported. At the time, the newspaper said, analysts concluded the mall was worth only half the outstanding loan amount.
Jeff Fleming, a spokesman for Milwaukee's Department of City Development, said the mall's management took a different tack after Ashkenazy departed, and it seems to be working. The occupancy rate has increased in part by leasing space to nonprofit groups and offering short-term leases to entice renters, Fleming said. A portion of the mall also is being developed into apartments.
In 2010, the same year the Ashkenazy partnership ceded ownership of the Milwaukee mall, the investment firm defaulted on a $27 million loan it used to buy the Channelside Bay Plaza in Tampa, according to reports in The Tampa Bay Times.
Channelside is a retail, dining and entertainment complex on the waterfront in downtown Tampa that Ashkenazy acquired in 2006, according to reports. After Ashkenazy failed to make loan payments, its lender on this property, the Anglo Irish Bank, claimed it.
The local port authority, which owns the land along the channel on which the plaza sits, also sued Ashkenazy for more than $300,000 in unpaid rent and poor maintenance, according to court records. The port authority did not respond to requests by The Sun for comment.
Despite sending the plaza into receivership in 2010, Ashkenazy recently resurfaced as a player in Channelside's future.
The owner of Tampa's professional hockey team, the Tampa Bay Lightning, has been negotiating with the bank to purchase the mall — a plan that appears to appeal to the port authority and to businesses in the floundering mall, according to The Times. The Lightning plays in an arena next to Channelside.
But under the receivership agreement Ashkenazy negotiated with the Anglo Irish Bank, the real estate firm has a "right for first refusal" to be given the opportunity to match any purchase offer made for the mall. This opened the door for a local developer, who wants to raze the mall and replace it with a baseball stadium, to negotiate with Ashkenazy for the property, according to reports last month.
In an interview with the Boston Globe, Alpert denied doing wrong by Channelside, saying that Ashkenazy more than doubled its occupancy rate.
He told The Sun that he sees few similarities between Harborplace and the properties in Milwaukee and Tampa. Harborplace is more similar to the historic Faneuil Hall, he said. Both were developed by the Rouse Co. and rely more heavily on tourists than the Milwaukee and Tampa malls.
In Boston last year, the association of merchants at Faneuil Hall Marketplace encouraged city officials to take a closer look at Ashkenazy because of the Channelside and Grand Avenue failures. They wanted the city to pressure struggling General Growth Properties, which owned Faneuil Hall's leasing rights, to consider other buyers.
"We were concerned because we had not had the best relationship with General Growth," said Susan Elsbree, communications director for the Boston Redevelopment Authority, the city's planning and economic development agency. Ashkenazy was an "unknown quantity" in Boston, she said, and the city wanted to make sure it wasn't inheriting another problem.
So far, Ashkenazy has not made significant changes to the look and feel of Faneuil Hall, she said, but the firm hired a well-respected management company,
The new managers have worked hard to market Faneuil Hall, she said. On Tuesday, CNN used the shopping center as a set for its election coverage.
"That was very creative and allowed the Marketplace to be on the world stage," Elsbree said. Boston officials are optimistic that Ashkenazy will make the most of Faneuil Hall, she said.
But, she added, "it's the beginning of the relationship."
Baltimore Sun reporter Luke Broadwater contributed to this article.