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April 1, 2024

Amid CT mall struggles, the Shoppes at Buckland Hills has quietly been mired in a years-long foreclosure

PHOTO | COSTAR The Shoppes at Buckland Hills mall has about 1.2 million square feet of space and has lost some key tenants in recent years, including Dick’s Sporting Goods.

It’s business as usual at Manchester’s Shoppes at Buckland Hills, an approximately 1.2-million-square-foot indoor shopping center that opened in 1990, in a prime location near Interstates 84 and 91.

The mall’s social media accounts are cranking out content, a new Eastern Mountain Sports store is set to open soon and a mall turnaround expert, Syracuse, New York-based Spinoso Real Estate Group, has taken over management and leasing.

But the Shoppes at Buckland Hills, which sits on more than 100 acres, has quietly been in foreclosure for nearly three years — and how, when and in what form it will emerge is anyone’s guess.

The mall went into foreclosure on June 24, 2021, after its owners fell behind on payments to Wells Fargo Bank, the holder of its $130 million mortgage.

The foreclosure came amid the pandemic, which caused people to stay home and avoid crowds, exacerbating longer-term struggles faced by U.S. malls. Connecticut malls, including Buckland Hills, in March 2020 were forced to temporarily close under state-mandated pandemic restrictions, creating further challenges.

In fact, certain tenants at Buckland Hills either closed permanently or withheld rental payments during that time period, which hindered the mall’s ability to make debt payments, according to the foreclosure complaint.

Buckland Hills has also lost some key anchor tenants in recent years such as Sears, which had occupied about 145,800 square feet of space, and Dick’s Sporting Goods, which relocated in 2021 to a nearby retail plaza in Manchester.

The Buckland Hills mall was previously owned by now-defunct General Growth Properties, which was acquired by Brookfield Property Partners in a $9.25 billion deal in 2018.

The Shoppes at Buckland Hills mall, as of March, had an occupancy rate of 83.4%, according to Spinoso Real Estate Group.

The foreclosure complaint was filed in U.S. District Court in Connecticut against Shoppes at Buckland Hills LLC, a company whose principals — Jonathan Kramer, Tyler Steel And Kathleen M. Courtis — all have Chicago business addresses.

Shoppes at Buckland Hills LLC failed to make required monthly debt service payments starting in May 2020 — at the peak of the pandemic, court filings said.

“As a result of this default, the entire balance of the loan is currently due,” the complaint states.

The amount due on the loan, as of June 2021, was $120.3 million, according to the complaint, which is $24.3 million more than the property’s current appraised value, town records show.

The property, at the time of the 2021 foreclosure filing, “failed to generate sufficient income to support all of the borrower’s financial obligations,” according to the complaint.

Court receiver

The court appointed Spinoso Real Estate Group as the receiver to manage the mall during the foreclosure.

Spinoso Group files monthly status reports with the court that show the mall’s financial performance.

Despite being in foreclosure, the mall reported a seven-figure operating profit in 2023, and has remained profitable during the first two months of this year.

According to the most recent filing, submitted to the court in March, the mall has $93.1 million in assets vs. $124.1 million in liabilities, including $109.7 million still owed on the mortgage loan.

The March report also listed an 83.4% occupancy rate, with 217,953 square feet of vacant space in the mall property.

Spinoso Group’s report lists 73 current tenants.

Spinoso Group representatives did not respond to multiple requests for comment from the Hartford Business Journal.

Thinking ahead

While Buckland Hills mall continues to generate operating profits, it’s unclear how much longer the foreclosure process will take. Complicating matters is that several big-box department stores, such as Sears’ former space, are not owned by Shoppes at Buckland Hills LLC, but by the former occupant’s parent company.

That complicates the mall’s ability to develop new uses for those spaces.

Eventually, the mall will need structural changes to remain viable in the long-term, experts said.

Michael Goman

“(Buckland Hills) will definitely continue to be a big contributor to the local economy,” said Mike Goman, principal of Goman + York Advisory Services, an East Hartford-based real estate consulting firm. “It’s just got to change to reflect what the local economy wants.”

He said the mall needs to adapt as consumers spend less time shopping at retail stores.

“I think retail will always be an important part of that location, but probably in a different form, and probably smaller,” Goman said. “And when (the retail component) becomes smaller, the reduction in that space will be replaced by other uses.”

He envisions more restaurants and entertainment venues, along with hotels and apartments.

“The site overall will get redeveloped,” Goman said. “But it won’t be as large of a retail facility as it is today.”

Goman said consumers’ tastes began changing in the early 1990s. In the late 1980s, shoppers would spend about 12 hours per month at a mall, on average, he said.

In the 1990s and 2000s, the amount of time consumers spent in malls declined precipitously — down to an average of about one trip per month.

Rather than consumers seeing shopping as an experience to be enjoyed, it has “become driven more by the fulfillment of a task as a necessity,” Goman said.

Some malls have pivoted by offering entertainment and experiential concepts aimed at appealing to younger people, who Goman says are “less interested in shopping for material goods and more interested in experiences.”

For example, a Japanese-based arcade chain recently opened a 60,000-square-foot entertainment venue at the Danbury Fair Mall that features bowling, a large selection of games, karaoke and billiards. Danbury mall’s owner, California-based real estate investment firm Macerich, has considered other new uses at the property, including converting the 75,000-square-foot former Lord & Taylor anchor store space into 144 apartments.

At the Stamford Town Center Mall, a 28-court pickleball complex, known as Pickleball America, opened last summer to much excitement. It’s situated in a former Saks OFF 5th department store, which closed in 2021.

Goman said he believes there is only room for one regional mall in Greater Hartford — and customers have already decided their preference is Westfarms.

He said Westfarms is maintaining customer traffic volumes at reasonable levels, partly due to its ideal market location — it straddles the West Hartford-Farmington line — and the quality of its anchor stores.

Recently, Jordan’s Furniture opened a 120,000-square-foot showroom, entertainment and restaurant space inside the former Lord & Taylor store at Westfarms.

“The vast majority of malls, and I put Buckland Hills into that category, are pretty routine,” Goman said.

Other malls in the region are struggling, too.

The Enfield Square mall lost both anchor tenants, Sears and Macy’s, before being sold at auction to a New York investor in 2018 for $11.4 million. Just over a decade earlier, the mall traded hands for $82 million.

In recent years, the Enfield mall has been plagued by vacancies and lack of investment, but it could soon have a new owner that has plans to redevelop the property with retail and other uses.

Similarly, the Meriden Mall has been considering filling its abundance of vacant space with pickleball courts and an ambulatory healthcare center. Dick’s Sporting Goods recently announced it would be closing its Meriden Mall location in late April.

Bright, but different future?

Gary Anderson

The hope for Buckland Hills’ future lies in its location. In addition to its proximity to major highways, it’s surrounded by hotels and restaurants, which keep the area busy, said Gary Anderson, Manchester’s economic development director.

Anderson said he doesn’t see the Shoppes at Buckland Hills disappearing any time soon.

“We know the market is changing,” Anderson said. “We’ve put in place a lot of flexible zoning here in Manchester to try to be ready for that. Whenever we get the ball, we’re ready to try something different and ready to go wherever the market is taking us.”

He said the property would be ideal for housing, as it offers a beautiful view of the region.

Also, the town is looking at innovative approaches to spur economic development through its recent Manchester Next study. It includes a conceptual plan for the Shoppes at Buckland Hills area that contemplates a variety of uses, including storefronts attached to the mall, a track-and-field facility, new parking structures lined with multifamily dwellings and mixed-use buildings, small plazas and market stands, shared-use paths and even an orchard.

Anderson emphasized that the study simply identified ideas for possible uses, without making any recommendations or specific proposals.

Goman said Buckland Hills needs to emerge from foreclosure before large-scale changes can occur.

“It’s a great location for potential multifamily residential,” Goman said. “So, its got a bright future. It’s just going to be different.”

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