8A — September 25 - October 15, 2020 — Retail Development Reimagined — M id A tlantic Real Estate Journal
M id A tlantic Real Estate Journal — Retail Development Reimagined — September 25 - October 15, 2020 — 9A
www.marej.com
www.marej.com
R etail D evelopment R eimagined
The owner-operator has continued to redevelop in PA and VT and across its portfolio Pandemic hasn’t stopped retail developer Heidenberg Properties Group from creatively adding value
F or the past few months, it hasn’t been hard to findretail horror stories. From the complete shut-down of enclosedmalls, thedramatic drop in retail sales, the rise in CMBS delinquencies for the retail asset-class and the ever- growing list of retailers filing bankruptcy including JCPen- ney, Nordstrom, J. Crew, 24 Hour Fitness, Gold’s Gym, California Pizza Kitchen, and GNC, there has been plenty of news about the retail indus- try…most of it bad. However, one retail developer has not only successfully man- aged its portfolio through the COVID-19 (coronavirus) pan- demic, Heidenberg Properties Grouphas launchedtworedevel- opment projects across different markets in itsportfolio, utilizing two different strategies. The first is the Hershey
While the partnership was memorialized prior to the Co- vid-19 pandemic, the partners
take advantage of them. In ad- dition to redevelopingHershey Square and creatively adding
“The COVID-19 (coronavirus) pandemic has brought uncertainty, stress and disruption to virtually every walk of life. It was critical for us to rally as a team, engage all of our stakeholders and work tirelessly to manage through it-together. However, we are in the business of adding value and that means both taking advantage of and creating opportunities to make our portfolio stronger. At Hershey Square, the Berlin Mall and other properties in the portfolio, there have been isolated victims, but those situations have allowed us to fine-tune our tenant-roster, add the type of retailers and non-retail users who have successfully evolved,
the convergence of Rtes. 422, 322 and 39, as well as being less than three miles from Hersheypark and its 2million annual visitors, Heidenberg Properties knew that the for- mer Kmart space would be at- tractive toavarietyof national retailers. Althoughfilling over 100,000 s/f of retail is never an easy task, the developer was poised once again to add value at the shopping center. From November 2019 through May 2020, Heiden- berg Properties executed
be desirable to top tier retail- ers and we couldn’t be more excited about the new tenant line up. The mix of treasure- hunt, value and experiential retailers that we are adding willwell-positionthisproperty for the long term.” To effectuate the redevelop- ment, Heidenberg Properties refinanced the property with Provident Bank. Provident Bank, headquartered in Is- elin, NJ provided the capital to take out the prior CMBS debt, as well as construction
and strengthen us for the years to come.” — Chief Operating Officer Jason Lazar
Hershey Square Shopping Center 1130 Mae Street,Hummelstown, PA 17036
received their official Act 250 Permit just weeks before the pandemic hit. While adjusting to the “newnormal”,Dousevicz, Inc., obtained its Vermont con- struction permit for Chestnut Place (the official name of the development) in May and commenced construction in June. Additionally, the Town of Berlin is pursuing a “New Town Center” designation for the mall property, as well as other adjacent lands, with the hopes of creating a walkable, pedestrian-friendly center that may include other housing, office and community uses. Most recently, the 34,000 s/f JCPenney location announced its closing, but the developers are signaling that a compelling replacement will soon follow as well as innovative uses for other outlots. Heidenberg Properties at- tributes its success in the pan- demic to theactiveengagement of its tenants, serviceproviders and lenders. The developer understood that each of these components were uniquely affected by the various stay- at-home orders and other gov- ernment restrictions and were determined to find mutually agreeable, if not ideal solu- tions. The upside was that this dislocation of “normal” created opportunities and Heidenberg Properties was determined to
uses to theBerlinMall,Heiden- bergProperties is intheprocess of negotiating new leases to spur development across its portfolio. According to Chief OperatingOfficer JasonLazar, “The COVID-19 (coronavirus) pandemic has brought uncer- tainty, stress anddisruption to virtually every walk of life. It was critical for us to rally as a team, engage all of our stake- holders and work tirelessly to manage through it-together. However, we are in the busi- ness of adding value and that means both taking advantage of and creating opportunities to make our portfolio stronger. At Hershey Square, the Berlin Mall and other properties in the portfolio, there have been isolatedvictims, but those situ- ations have allowed us to fine- tune our tenant-roster, add the type of retailers and non-retail users who have successfully evolved, and strengthen us for the years to come.” AboutHeidenbergProperties Heidenberg Properties is a full-service real estate devel- opment company focused on the acquisition and develop- ment of open-air shopping centers, net leased properties, and secured note purchases in the Eastern United States. The group is actively seeking newacquisitions and develop- ment opportunities. MAREJ
FromNovember 2019 throughMay 2020, HeidenbergProperties executed leases for over 90,000 s/f with companies comprising a “who’s who” of today’s leading retailers. In what the developer has been calling “Hershey Square 2.0,” Heidenberg Properties has entered into new ten-year leases with T.J. Maxx, Big Lots, Five Below, and Planet Fitness, and is building a new pad for Chipotle (including a drive thru and “Chipotlane”) in front of the Weis Markets. In addition, Weis added additional term to its lease, further demonstrating its confidence in the center.
leases for over 90,000 s/f with companiescomprisinga“who’s who” of today’s leading retail- ers. In what the developer has been calling “Hershey Square 2.0,” Heidenberg Properties has entered into new ten-year leases with T.J. Maxx, Big Lots, Five Below, and Planet Fitness, and is building a new pad for Chipotle (including a drive thru and “Chipotlane”) in front of the Weis Markets. In addition, Weis added addi- tional termto its lease, further demonstrating its confidence in the center. According to Heidenberg Properties’ VP of Real Estate Ken Simon, “These are exactly the types of opportunities we seekwhen we make acquisitions. We knew that this space would
financing for the re-tenanting. While the capital markets have been largely stagnant, Heidenberg Properties closed on this $32M refinancing in July and will commence construction in September. All new tenants are projected to be open and operating by Spring 2021. Provident chief lendingofficerWalterSierotko stated, “Refinancing in this environment is primarily sponsor-driven, especially as it relates to redevelopment. Heidenber g Properties and its partner, Strategic Real Estate Partners have the experience and track record to sufficiently mitigate executionrisk.Weare confident that thesedevelopers will deliver on their business plan and we are pleased to
Square Shopping Center lo- cated in Hummelstown, PA. Upon the departure of Kmart from 107,000 s/f in March 2019, Heidenberg Properties began marketing the anchor space for lease.Despitehaving an anchor in Kmart that was neither a draw nor a driver of cross-shopping, the balance of the tenantsatHersheySquare thrived. The 55,000 s/f Weis Markets, which added a beer garden in 2018, the 10,000 s/f Fine Wine & Good Spirits- Premium Collection, as well as Panera Bread, Five Guys, Visionworks, and Applebee’s all contributed tomakingHer- sheySquare thecenterof retail activity in the Hummelstown market. When combined with Hershey Square’s location at
The Berlin Mall Redevelopment in Progress 282 Berlin Mall Road, Berlin, VT 05602
The Berlin Mall 282 Berlin Mall Road Berlin, VT 05602
bring theminasnewcustomers to the bank.” Upon completion of the ten- ant fit-outs, Heidenberg Prop- erties projects Net Operating Income to increase by over 22% from its previously stabilized number. The Berlin Mall in Berlin, VTrepresentedanentirely dif- ferent sort of challenge for the
Properties Group entered into a unique partnership with Dousevicz, Inc. to develop 98 units of Independent, Assisted Living andMemoryCare units onone of theMall’s outlots. The Dousevicz family isavertically- integrated owner and operator of over 500 senior housing units throughout Vermont and being equally familiar
withVermont’s uniqueAct 250 Permit process, represented an ideal partner. By adding a residential component located on land adjacent to the exist- ingmall buildings,Heidenberg Properties will be taking its first step towards creating a vibrant town center, where people of all ages live, work and play.
New Jersey-based developers. The Berlin Mall boasts thriv- ing anchors in Walmart (one of only five in Vermont), Kohl’s which opened in March 2016, and the more recently added junior anchorPlanet Fitness in December2017.Despite strong performing anchors however, the Mall’s inline tenants have experiencedmixedresults. The
Mall’s owners were convinced that in order to survive long term in this challenging envi- ronment, a new approach was required. Taking advantage of the property’s size (over 65 acres), proximity to major highways such as Routes 89 and 62 and major employers such as the Central Vermont Medical Center, Heidenberg
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