A Towson-based developer plans to complete on Tuesday its $27 million purchase of the troubled Village of Cross Keys, salvaging a deal that nearly crumbled in the months after the pandemic arrived in Maryland.
Caves Valley Partners planned to purchase the North Baltimore mixed-used center from Ashkenazy Acquisition Corp., a New York real estate firm that also owns downtown Baltimore’s Harborplace, which was placed in court-ordered receivership more than a year ago. Under the Cross Keys deal, Caves Valley will assume $20 million in debt.
Caves Valley, whose principals said they grew up frequenting the once vibrant community of shops, office and amenities in North Baltimore, had sought to buy and refurbish the center for more than a year, though Ashkenazy initially said it wouldn’t sell. The firm put down a nonrefundable deposit March 9, days after the first cases of COVID-19 were reported in Maryland and about a week before schools and much of the economy shut down in a prelude to a state-ordered quarantine.
“The deal was in a tough spot, where it was not the deal we got into initially because the world had changed,” said Arsh Mirmiran, a Caves Valley partner, in an interview. By the end of March, “I thought maybe the timing of this thing is horrendous and it won’t happen. ... But in my mind, I wasn’t giving up on the deal.”
Despite a shock to the economy that has reduced commercial values and led to countless business closures, Mirmiran said he and his partners still see the long-term potential of Cross Keys.
He argues it boasts the best non-waterfront location in the city. He added that the center has visibility off Interstate 83, is centrally located to many city and Baltimore County neighborhoods and has a rich history as a creation of visionary developer Jim Rouse, developer of Harborplace and Columbia. Part of an experimental planned community by The Rouse Co. in 1965, it still has a loyal local following in North Baltimore.
“It was a property well ahead of its time in terms of design,” Mirmiran said. “It always felt like a California-esque project, landscaped and a great feeling when you walk around in the courtyard.”
The center has struggled with neglect and the loss of tenants over several owners and now is only about 60% to 65% occupied in both retail and office portions. Most stores have reopened to some extent after the COVID-19 closures. The Village Square Cafe, which offered carryout during the pandemic, now offers outdoor dining, and retailers have started bringing some goods outside in front of their stores. Mirmiran said he believes no tenants have closed for good or announced closings amid the pandemic.
Caves Valley’s plans remain largely intact, including bringing in a small grocer, in a new building to be constructed on what is now a parking lot outside Talbots; adding restaurants, a fitness studio, hair salon and other tenants to complement existing clothing and jewelry boutiques and art galleries; and constructing a 325-unit market-rate apartment building.
“The retailers that are there now, we hope to keep all of them and support them and bring more business to them,” he said.
One new office tenant, a medical office already has committed, and Caves Valley expects to have other tenants signed before the end of the year and the property filled within two years.
The plans have the support of surrounding neighborhoods and community associations. Groups that have a say over zoning changes, including the boards of the Roland Park Civic League and the Baltimore Country Club, also voted in favor of the proposed redevelopment.
Mirmiran outlined redevelopment plans during a civic league meeting in January attended by area residents, including from Cross Keys and Roland Park.
“There was broad consensus that folks felt like it was being ignored by the current owner and unless something changed, it would continue to fail,” said Bob Connors, president of the Roland Park Civic League. “There was great excitement that a local developer was looking to buy it and restore it to be a place where people lived and shopped and met up with people at restaurants.”
Caves Valley has developed several projects in the Baltimore region, including Cross Street Market, the Horseshoe Casino, and the office and apartment project Stadium Square, all in South Baltimore.
As the developer made its deposit in early March, all appeared on track at Cross Keys. But as the coronavirus forced shutdowns and the stock market swooned, some investors had second thoughts and others were forced by their own circumstances to back out. That’s when months of working to salvage the deal began.
The partners spent weeks lining up new investors and working with Ashkenazy, seeking either a price reduction or more time to close. The New York owners agreed to a 10% price reduction, based on the potential for some loss of rents if tenants don’t survive, possible increases in expenses and an expected slowdown in new leasing activity. Mirmiran said Ashkenazy saw the Towson group as the right fit and was willing to work with it.
Representatives of Ashkenazy did not respond to a request for comment on the sale.
“We needed to figure out what this would look like going forward with COVID,” Mirmiran said. “It took us a lot of work over a two-month period to sort through that with the seller and get investors comfortable that the deal would still work going forward.”
“It was touch and go there for a solid couple of months, until we got a much more clear picture of the impact of the coronavirus and how we saw the future of the property,” he said.
Area residents also worried that the deal might fall through, Connors said.
“It appeared Caves Valley was pretty committed to the project,” Connors said. “They stuck through it.”
Councilwoman Sharon Green Middleton, who represents the area, said the developers started out on the right foot by meeting with and seeking input from area residents.
“They want to keep the same feel and vision that started with Cross Keys, and this developer promises to do that ... and give local businesses a chance to be part of the development,” Middleton said.
Despite changes in ownership and increased vacancies, she noted that several strong anchors, such as Williams Sonoma and Talbots, have held on and coexisted with small shops and galleries.
Caves Valley acquired all the retail and office space, a parking garage and the tennis barn, where Coppermine runs youth sports programs, nearly 300,000 square feet in total. The developers do not have ownership in the center’s hotel or its 10 residential condominium properties. Mirmiran described the current investors as a sophisticated group with an affinity for the property and a bullish outlook for the future.
He counts himself among those with fond memories of Cross Keys, recalling times in middle and high school when he would frequent the former deli for corned beef and chicken salad sandwiches while his mom would shop or get her hair cut. During Baltimore’s Memorial Stadium days, visiting teams were known to stay at the hotel. One restaurant, The Roost, was known as the place to go for power breakfasts in the 1980s.
Ashkenazy had owned the property since 2012, acquiring it as part of a deal to buy Harborplace. Mirmiran said he believes Ashkenazy had noble intentions, but didn’t understand the center’s place in the local community and lost touch with tenants and community groups.
The Baltimore native got the idea to try to buy the center a couple of years ago after his mother-in-law moved into a Cross Keys condo and he noticed the retail area had fallen into disrepair.
Representatives at the New York developer, one known for trophy properties such as Faneuil Hall in Boston, ultimately told Caves Valley partners “you guys are the company that can do what we were not able to do,” Mirmiran said.
“I hope that it will be what it was back in the day, a happening place with young and old ... and a cross-section of Baltimore,” he said. “I have fond memories and am trying to bring Rouse’s vision back to life.”