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Developer hopes to bring stores to riot-damaged and vacant city buildings

Baltimore, MD -- May 4, 2015 -- Carl Verstandig, president of America's Realty LLC, stands in the vicinity of Pennsylvania and North Avenues, where his company plans to reinvest in the riot-torn area. Barbara Haddock Taylor/Baltimore Sun
Baltimore, MD -- May 4, 2015 -- Carl Verstandig, president of America's Realty LLC, stands in the vicinity of Pennsylvania and North Avenues, where his company plans to reinvest in the riot-torn area. Barbara Haddock Taylor/Baltimore Sun (Barbara Haddock Taylor / Baltimore Sun)

For 29 years, Carl Verstandig's Pikesville-based company has been buying rundown, vacancy-plagued shopping centers in distressed neighborhoods and enticing tenants with offers they couldn't refuse — free rent for a time and the ability to walk away with no penalties.

The formula worked, and many of the merchants, most of them independent, stayed, breathing new life into centers across Baltimore and 22 states.

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On Monday, Verstandig, the CEO and president of America's Realty LLC, stood on a corner at North and Pennsylvania avenues in West Baltimore, ground zero of riots that broke out last week, and saw possibilities for redevelopment.

His company is prepared to invest about $15 million in riot-damaged and vacant properties along the North and Pennsylvania corridors and turn them around with its formula of using lease incentives to lure tenants, Verstandig said. He began exploring the idea after being contacted last week by property owners looking to sell.

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"With what has happened in Baltimore, a lot of people that I've spoken to have said, 'We've had enough. This is more than we can take. We're going to walk away,'" he said. But "I still believe in Baltimore. Longer-term, it will come back stronger than ever."

Verstandig's faith in the city stems from his own history with it. His father owned Sam's IGA corner store in East Baltimore during the 1960s, and his family lived upstairs. When riots broke out in 1968, the store was untouched.

"The neighborhood knew we lived there; we gave food to the neighborhood," he said. "We were open during the riots. The neighborhood protected us from looters. When they came in, the neighborhood stepped in and we made it through."

America's Realty has identified about a dozen properties it hopes to buy, some damaged, many vacant, along two miles of North Avenue and along more than a dozen blocks of Pennsylvania and is negotiating with some of those owners, Verstandig said. It has lined up small grocers, independent pharmacies, urgent-care center tenants and others interested in moving in.

"We come to an area like this," he said Monday at Pennsylvania and North, "and we look at where the void is."

He motioned to one of the rioting's most visible scars, a burned-out and boarded-up CVS Pharmacy. It's one of 235 businesses Baltimore officials identified as sustaining damage April 27, the day of the funeral for Freddie Gray, the 25-year-old man who died from a spinal injury he received in police custody.

In the wake of looting and arson, businesses were left with damage from broken windows to total loss of property and merchandise, said William H. Cole, president and CEO of Baltimore Development Corp., which on Monday launched the BaltimoreBusinessRecovery website in an effort to assist damaged and shuttered businesses and connect them with city, state and federal resources.

The BDC has been in touch with about 80 percent of the owners of damaged property, Cole said. Many have reopened and those that haven't "are intent on reopening, and we're doing everything humanly possible to make that process as seamless as possible," he said.

Cole said the city will "work with anyone willing to invest in our neighborhoods."

"It's critically important that we get a lot of private investment… in the communities that are impacted," to bring in jobs and services, said Donald C. Fry, president and CEO of the Greater Baltimore Committee business organization. He added that both government and private sector investment is necessary.

Verstandig said it could cost $30 million to $40 million to rebuild damaged properties in the Pennsylvania and North corridors alone — citywide rebuilding efforts would cost much more.

America's Realty plans to seek tax breaks and other assistance from the city and the state to help with redevelopment costs and allow it to give breaks to tenants. Verstandig's plans include offering a year's free rent and the ability to walk away from a five-year lease after three years if tenants are not satisfied with business.

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"The retailers that we've spoken to are very interested in going into the city … and we feel the folks in those areas deserve to have good neighborhood stores," he said. "The demographics are very strong. There are a lot of people who need services."

Valencia Langston, who lives near Mondawmin Mall but has an aunt who lives near the burned-out CVS, said the loss of the store has been difficult for her aunt and other family members who need prescriptions but have no transportation.

"It needs to get better," said Langston of the neighborhood. "I want that CVS back. My family needs that."

CVS said Monday it is planning to rebuild.

Verstandig says his company, which started 29 years ago with a Parkville shopping center redevelopment, has a successful track record redeveloping and re-leasing inner city centers. The company now owns 284 centers nationwide, including Edmondson Village Shopping Center, Pimlico Center, Belvedere Thrift Center, Oakleigh Shopping Center and Liberty Center in Baltimore.

Verstandig also operates a separate company, founded before America's Realty, that purchased 14 vacated 7-Eleven convenience stores in the city. The developer outfitted the stores and leased them to family-owned operators, many of whom remain in business.

"When you see a city burned, torched and looted and people are out there and cleaning up the day after, to me that gives me confidence," he said. "When you see the city come together after destruction instead of staying in their houses and hiding, it shows me they deserve to have services that aren't there anymore."

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