Published in the Current and the American Journal; co-written with Brendan Moran
Maine’s largest retail property, the Maine Mall, is up for sale, and some speculate the one-time pig farm could go for $250 million.
Until the late 1960s, the land was home to a number of pig farms. “There was at least 1,000 pigs in there – or more,” remembered Bob Fickett, a South Portland councilor who raised pigs himself on a Highland Avenue farm.
The area’s pig farmers were paid by towns to pick up trash, which they would then bring back to the farm, boil to sterilize and feed to the pigs. “Garbage that was worthless provided an income,” Fickett said.
In the late 1960s, Massachusetts developer William Lane purchased the land
piecemeal from the owners. He died in 1969, and his estate sold the parcels to Julian Cohen of Eliot, Maine. The land was wet and not great for building. “T ey drained a lot of it when they went in there” to build the mall, Fickett said.
Even now, “when they build out there they have to put in pilings that run dozens of feet into the ground,” said South Portland City Manager Jeff Jordan. The location was perfect, at the intersection of I-95 and I-295. The mall flourished, expanding several times and buying up land to create other shopping areas in the region.
Cashing out on top
S.R. Weiner & Associates, one of the companies that now owns the mall, plans to sell the 1.2 million square feet of retail space, which includes leases with Filene’s, Macy’s, J.C. Penney, Sears, Best Buy and Linens n’ Things.
Sources familiar with the mall’s operations and commercial real estate said the mall could sell for around $250 million.
Cigna Insurance and the New York State Teachers Retirement System own the mall with S.R. Weiner. Tom DeSimone, the executive vice president of S.R. Weiner, said the decision to sell the mall was unanimous.
“We did it because it made a lot of sense,” said DeSimone. Low interest rates have created a seller’s market. DeSimone also said that because the mortgage will mature next year, this would be an opportunity to sell it without debt.
“If you’re considering selling, there’s no question the time is now,” said Tom Moulton, a principal at NAI/The Dunham Group, a company that specializes in marketing commercial real estate. Moulton said the real estate market has been hot for the last couple years, but it’s unclear how long that will last.
“There is a very competitive market for this type of property, and it has a longstanding track record for outstanding economic performance,” said Jerre Bryant, the former general manager at the Maine Mall and currently the administrative assistant in Westbrook.
Bryant said the Maine Mall can charge higher rents than the demographics can support because it has virtually no competition. He said the mall also gets a boost from summer tourists. He said the mall did market research that proved as much in 1998.
“What we learned is the summer tourist in Maine is generally pretty affluent,” said Bryant. “They do spend money, and they spend it at the Maine Mall.”
Bryant said the sale made sense from S.R. Weiner’s perspective because the mall wouldn’t continue to expand at the rate it has. DeSimone said the mall has tripled in size since Stephen Weiner, the founder of S.R. Weiner & Associates, purchased it in 1981.
“The mall will continue to appreciate in value,” said Bryant. “It’s just that the rate of growth certainly was greater for the last 10 years than one would anticipate in the next 10 years. So I think the timing is good from an investment return standpoint.”
Bryant said S.R. Weiner is a much different company than it was 20 years ago. The Maine Mall was the first retail property Weiner bought, and, Bryant said, for many years it was the anchor in his real estate portfolio.
Weiner bought the mall in 1981 from Leatherbee and Company – Julian Cohen’s real estate company. Before buying the mall, Weiner
had been an executive at Leatherbee.
S.R. Weiner now owns and manages about 50 retail properties or about 14 million square feet of commercial space. Its sister company, W/S Development Associates, is currently developing 2.6 million square feet of commercial space, which includes the old Bradlees Plaza in Westbrook.
“We’ve all been in this deal for a long time,” said DeSimone. “Some of us for as much as 22 years.”
Big contributor to city
South Portland officials will be watching the sale closely to see what company purchases it and for how much. The mall contributes $3.1 million in real estate and personal property taxes to South Portland.
City Assessor Elizabeth Sawyer said the Maine Mall had been looking for a review of its assessment to get $20 million removed from its $142.8 million real estate tax assessment. But Sawyer said that request has been dropped.
Sawyer said the sale would not trigger a reassessment but said she would include the sale information in a review planned for next year, in which she will revisit last year’s revaluation of all properties. “I’m sure assessors throughout New England are going to be very interested” in the sale price, she said.
“We want the type of owner S.R. Weiner was,” said City Manager Jordan. He said the company has done a lot for the community, including supporting the People’s Regional Opportunity Program and holding charity nights around the Christmas holidays.
Jordan said the company approached him five years ago and offered to pay for a full-time police officer for the mall. He said it’s cut down on crime at the mall and saved the city money it would have had to spend on an officer to deal with shoplifting and other crimes at the mall. “Hopefully, that will continue” under the new ownership, said Jordan.
“I’d say there’s a wealth of buyers that could be interested in it,” said DeSimone, who said the buyer could be anything from a large mall management company to a pension fund.
Bryant said the Simon Property Group, the company that manages the mall, would most likely purchase the property. Based in Indianapolis, Ind., Simon Property Group manages 238 properties around the country. “They are the preeminent owner and manager of mall properties in the country,” said Bryant.
A spokesman for the company said they don’t comment before closing on a property. Simon began managing the Maine Mall in February of 2002.
“They never would have taken on the management contract if they didn’t have a desire to become owner,” said Bryant.
Bryant said consumers probably wouldn’t see much of a difference with the mall under new ownership. He said employees would probably see the biggest change.
“It’s not going to be dramatic change,” said Bryant. “I do think by virtue of being a publicly traded company that has to show a return, they do have to be a little more bottom-line oriented.”