Thursday, May 19, 2011

NEIGHBORHOODS: N.Y. firm in deal for Faneuil Hall shops

The historic Faneuil Hall Marketplace is expected to change hands after a group of New York investors struck a deal with General Growth Properties to buy the lease to the trophy Boston property.

Ashkenazy Acquisition Corp., a private real estate investment firm in Manhattan, had the winning bid, estimated at about $136 million, and edged out Genesis Management Group of Boston, according to local executives briefed on the proposals. Ashkenazy Acquisition, on its website, says the business has over 13 million square feet of retail, office, and residential properties in its portfolio, including Union Station in Washington, D.C., and Rivercenter Mall in San Antonio.

Faneuil Hall Marketplace is owned by the City of Boston, which leases out three of its four buildings, Quincy Market, North Market, and South Market, to General Growth. The deal, detailed in a meeting yesterday to city officials, comes more than two years after the struggling Chicago mall operator first put the shopping center up for sale. New management at Faneuil Hall Marketplace could come as a welcome change to merchants and city officials who have battled for years with General Growth over the direction of the outdoor mall and the loss of local shop owners.

“It’s really an opportunity to start fresh,’’ said Brenda McKenzie of the Boston Redevelopment Authority, who met yesterday with a General Growth executive and Mayor Thomas M. Menino to discuss the plans.

“Given that Ashkenazy focuses on specialty markets and historic marketplaces, we see an opportunity for a closer fit. Their interests are more closely aligned with the mayor’s and the merchants’.’’

General Growth, which recently exited bankruptcy protection, declined to comment.

Cubie Dawson of Ashkenazy Acquisition said of the agreement: “I don’t know if that has been finalized.’’

The sale of Faneuil Hall Marketplace is part of General Growth’s larger effort to dispose of roughly 125 properties that do not fit in with its portfolio, according to McKenzie, the BRA’s director of economic development. These are mostly specialty centers or festival markets similar to Faneuil Hall. The real estate investment trust took over Faneuil Hall through its $7.2 billion acquisition of Rouse Co. in 2004.

General Growth is required, as part of its agreement with the city, to notify Boston officials if there is a transfer of the lease. The city does not have the authority to reject the deal unless there is a legal problem with the arrangement.

Menino is hoping to meet with Ashkenazy principals in the next week to discuss Faneuil Hall’s future, McKenzie said. The New York firm reached out to Boston officials to express interest two years ago when General Growth, facing mounting debt problems, first put the premier property up for sale.

Menino’s goals are to ensure the new marketplace operators invest in needed renovations and keep a fresh, interesting range of retailers that include local merchants.

“Obviously, it is important to have a mix of tenants and to make sure the center has a Boston flavor,’’ McKenzie said.

Merchants at the marketplace have long been at odds with General Growth because of soaring rents and a preference for national retailers.

Earlier this year, General Growth began cracking down on struggling tenants, including beginning eviction procedures against celebrity chef Todd English’s Kingfish Hall restaurant after it fell behind by tens of thousands of dollars in rent.

English, in a statement, said he is in the “final stages of ongoing negotiations’’ toward a lease that will involve changing the concept at the Kingfish location.

“We have a great plan for seamlessly transitioning to what we believe will ultimately be a better fit for Faneuil Hall and our valued clientele who visit us there,’’ the statement said. “We have enjoyed working with General Growth and look forward to forging ahead with this new team.’’

Carol Troxell of the Faneuil Hall Merchants Association said the retailers are optimistic that the new landlord will work to preserve the integrity and historic nature of the marketplace.

“We also hope that long-term, vested merchants will be recognized for their loyalty to the marketplace and given reasonable leases commensurate with that loyalty, ’’ Troxell said.

Paul Grant, president and chief executive of Genesis Management Group, said the local real estate firm has made several bids for Faneuil Hall Marketplace and believes the company, with its Boston roots, is uniquely qualified to turn around the project locally.

Genesis has worked on several high-profile projects in Boston, including Long Wharf, Copley Place, and the John J. Moakley Federal Courthouse.

“We’re ready to close if there is an opportunity,’’ Grant said. “It’s a project we’d love to do.’’

Jenn Abelson Boston Globe May 10, 2011

No comments: