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A New York City real estate investor has stepped in to acquire FairOaks Mall for a fraction of what the previous owner owed on a past-due mortgage, real estate records show.
The acquisition took place without fanfare a few weeks ago, nine months after a court-ordered foreclosure was issued against the Columbus mall’s previous owner, Fair Oaks Mall Acquisition LLC.
An entity known as Columbus Noteholder LLC bought the mortgage this fall and took over rights to collect rent from existing leases. The investment group is associated with GJ Realty, a company with offices on West 37th Street in Manhattan, a stone’s throw from Herald Square, the Garment District and Times Square.
New York attorney Gabriel Jeidel is president of GJ Realty. But the real estate investor who has also bought struggling malls in Kansas, Minnesota and now Indiana over the past five years declined to discuss his plans for FairOaks, located on the city’s north side.
When contacted by telephone, Jeidel politely told a reporter he was not willing to discuss the deal.
GJ Realty’s and Columbus Noteholder’s mall purchase started taking shape in October as lead lender Wells Fargo Bank was pressing to bring the mall to a sheriff’s sale Nov. 12. That date was later canceled by attorneys representing the bank.
Columbus-based mall officials who handle publicity for the once-thriving property were upbeat about the sale, suggesting it’s the first step in a rebirth of the sagging shopping center.
“FairOaks Mall was purchased by an investment group that has confidence in Columbus and the mall,” said Kim Showalter, a FairOaks spokeswoman, referring to recent cosmetic upgrades at the property. “The new owners plan to revitalize and modernize the mall — as is evidenced by the new LED lights, added wall sconces and new color palette for the interior. We are looking forward to the community supporting the mall and its tenants.”
Mortgage records filed in Bartholomew County aren’t fully clear on the sales price that Columbus Noteholder is paying to acquire rights to the mall via what’s known as a quitclaim deed. That term means the previous owner is relinquishing rights to the title on the property and any other interests. If local investors are included in the sale, their names aren’t listed in mortgage documents.
Tenants at the mall said they were told of the sale via a letter from FairOaks’ property manager this past month, but no details of the new ownership structure were provided.
According to the latest records for the loan encumbering the property, the loan was liquidated Oct. 4 for $5,034,109, although additional monies could have changed hands to complete the deal and they aren’t filed in the official record yet, said Ben Carlos Thypin, director of market analysis with Real Capital Analytics research.
The $5 million figure represents 29 percent of the $17.5 million in principal taken out as a mortgage loan by then-owner Fair Oaks Mall Acquisition LLC in June 2006. Fair Oaks Mall Acquisition’s managing partner is based in Howell, N.J.
When that loan went unpaid over a number of months, lenders associated with a real estate trust that ended up controlling the mortgage moved to foreclose on the 415,000-square-foot mall and seek new owners.
The suit brought by Wells Fargo contended that Fair Oaks Mall Acquisition defaulted on its loan by missing eight $119,586.75 monthly payments between October 2010 and May 2011. That led to the entire loan being called via a demand letter sent to the mall’s owners May 10, 2011, court records show.
FairOaks, which opened in 1990 on 25th Street near Central Avenue, has been coping with 20 store and restaurant vacancies as Christmas approaches, among 55 spaces that could be leased. Some Columbus shoppers have said they prefer newer retail centers, as well as buying products online in greater frequency.
Some of the mall space has been leased to nontraditional tenants. For example, Cummins, the Columbus-based engine manufacturer, leases 25,000 square feet of office space in a former Goody’s clothing store in the mall’s northern wing.
“We are looking forward to the community supporting the mall and its tenants,” mall representative Showalter said in an email. “Shopping local during the holidays and beyond will help keep FairOaks Mall (a) hometown shopping destination and a place for community events.”
Shopper Marcia Potts of Columbus, however, last week described the current condition of the mall as sad.
“I wish there was more here for us to take advantage of,” she said.
Potts, a mother of six children, said she and especially her teen-age daughters shop more often at Greenwood Park Mall, owned by publicly traded Simon Property Group. The mall in Greenwood has more retailers that appeal to teens, including Charlotte Russe, American Eagle and Hollister, she said.
“Usually, FairOaks is so empty I park right outside the doors of the store that I’m going to visit,” Potts said.
Andrew Son, who runs Mark Pi’s China Gate Restaurant, said he’s seen little improvement in the mall since new ownership took over.
“They changed some decorative lights to blue LEDs and painted posts in the parking lot,” Son said. “We don’t see anything else. I keep paying my rent, and stores keep closing one by one. It worries us. Hopefully, next year they do some things to improve the mall.”
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