You might think that when you spend $6 million to renovate a shopping center and then fill it with tenants, you're out of the woods. But as Richard Dube knows, it's not something to count on.
Mr. Dube is now in the middle of his second rehab job at the Catonsville Shopping Center, the 283,000-square-foot strip center at U.S. 40 and St. Agnes Lane he bought in 1987. The first time around, anchor tenant Ames filed for bankruptcy and, in 1992, walked out on its lease, sending the president of Westchester, Ill.-based Tri-Land Properties Inc. back to the drawing board.
The newest rehab will bring a Caldor department store and a Metro Food Market to the complex. But the significance of Catonsville Shopping Center outside its immediate neighborhood is that it illustrates just how far business people have had to go to make development deals work these days.
"The real estate business so slowed down in the last three to five years that to resurrect the building, I didn't think we could do it," said Mr. Dube, whose company owns 4 million square feet of supermarket-anchored shopping centers.
First, he had to find a new tenant for the Ames space, which had been a Zayre store before Ames bought it in 1988. Then he had to get the new tenant, Caldor, out of its lease in the old Stewart's department store space at Westview Mall. Then he had to persuade Super Rite Foods Inc. to move from its existing Basics store to the other side of the center and open one of four prototypes for Super Rite's new, expanded Metro Food Market concept.
Then, he had to convince banks that the center at least $6 million in debt would be healthy enough to support $7 million more.
"I met with every major bank in Baltimore and they didn't want it," Mr. Dube said. "I was like the plague walking through the front door."
And there was more: "To get Caldor out of their lease [at Westview] I had to buy the Caldor building," he said.
To do that took another $2.9 million and a winning bid at the bankruptcy court auction of the building owner's assets. Tri-Land had the money only because of an all-but-forgotten detail of the Zayre-Ames merger: former Zayre parent TJX Cos. had retained guarantees for the Catonsville store's lease. That guarantee proved crucial because Ames' bankruptcy allowed it to walk away from its lease responsibilities, leaving only the much healthier TJX to foot the bill. TJX's settlement paid for the Caldor building.
Mr. Dube said Service Merchandise is the most likely tenant for the Caldor space. And with Caldor expected to open its new store Nov. 1, three months after Metro Food Market, Mr. Dube is allowing himself to breathe more easily.
Forensic signs lease
Last year's takeover of Optima Inc. by MacKenzie/O'Conor, Piper & Flynn Commercial Real Estate Services has borne its first big bit of fruit, as the Annapolis-based subsidiary brought in one of the largest office transactions of the new year.
Forensic Technologies Inc. signed a new 10-year lease for 39,100 square feet of office and storage space at Annapolis Commerce Parks, a deal worth more than $3.2 million.