Investments
90-30 Metropolitan Ave. Forest Hills, NY
90-30 Metropolitan Ave In September 2004, together with its international real estate fund partner, the Company exercised a previously acquired option to purchase the non-performing debt on two vacant, environmentally contaminated industrial buildings totaling 80,000 square feet from an institutional mortgage fund. During the option period, an agreement was negotiated to acquire a deed-in-lieu of foreclosure from the bankrupt borrower. As a result, in December 2004, the Company closed on fee title to the two buildings free and clear of the previous mortgage debt. Each building was to be renovated and redeveloped into a two-story urban retail property. The smaller 20,000 square foot building was sold prior to redevelopment for 65% of the total acquisition cost. The other 60,750 square foot building was redeveloped with a new fa├žade, a new raised roof structure and roof system, and all new base building mechanical systems. Additionally, Mark Holdings obtained all necessary approvals from the New York State Department of Environmental Conservation to install an environmental remediation system for the treatment of onsite groundwater contamination. In May 2008, the Company refinanced the acquisition debt providing a return of 162% of the initial equity investment with strong debt service coverage. Tenants at the property include Michaels Stores, Trader Joe's and Staples.
The Arches Deer Park, NY
The Arches In October 2003, Mark Holdings acquired as co-developer with Tanger Factory Outlet Centers (NYSE:SKT), Apollo Real Estate Advisors (now known as AREA Property Partners) and BDG, an 81-acre property located on Long Island, NY. Originally improved with 720,000 square feet of industrial and office buildings, the joint venture rezoned and redeveloped the site into a new $300 million, 800,000 square foot power retail and factory outlet shopping center. The shopping center opened in October 2008 to great national press as to the project's cutting edge tenant mix and "green" design features. Well-known national retailers occupy the property including Neiman Marcus Last Call, Nike, Old Navy, Saks Fifth Avenue OFF FIFTH, Christmas Tree Shops and Regal Cinemas. (For more information on this property, please visit www.tangeroutlet.com/deerpark)
New Hyde Park Commons New Hyde Park, NY
New Hyde Park In May 1999, Mark Holdings signed a long-term ground lease on a long-vacant environmentally contaminated former gas station and carwash located at a five-way intersection in Nassau County (Long Island) New York. After excavating and disposing of significant quantities of contaminated soil and obtaining the New York State Department of Environmental Conservation's approval, Mark Holdings designed and constructed a new 14,500 square foot neighborhood retail center. The property opened fully leased in 2000 with tenants that include Duane Reade, Sleepy's and Starbucks. In February 2001, Mark Holdings converted its construction loan to a permanent loan with an earn-out of 130% of the initial equity investment.
Samsondale Plaza West Haverstraw, NY
Samsondale Plaza In May 2001, Mark Holdings contracted to purchase a defaulted first mortgage in foreclosure and bankruptcy collateralized by a 143,000 square foot, grocery-anchored retail and office center located approximately 25 miles north of Manhattan in Rockland County, NY. Prior to closing, Mark Holdings worked successfully to get the borrower's bankruptcy dismissed and proceeded with a foreclosure sale. As the successful credit bidder, Mark Holdings closed in September 2001 on fee title to the property. Prior to closing, Mark Holdings negotiated a termination agreement with an existing anchor tenant who possessed a long-term, below-market lease. This allowed Mark Holdings to market this space to higher rent paying tenants while receiving the current income from the existing tenant. Upon securing new leases for the space, Mark Holdings terminated the existing lease. The property has been improved with new facades, a new parking lot, new signage and a new pylon sign which has significantly increased market rents at the center and attracted more national retailers. Finally, the center's existing regional grocery anchor, which also had a long-term below market lease, violated a radius restriction by purchasing a nearby competitor's location. Mark Holdings commenced an action and forced a settlement, with the defaulted tenant buying out of its lease at a significant cost. Mark Holdings was then able to secure a new anchor lease with Stop & Shop, representing better credit at over 3x the previous rent. In January 2005, Mark Holdings refinanced the acquisition debt with a new long-term fixed rate loan that returned approximately 130% of the initial equity investment and represents an approximate loan to value of 50%.
25 West 14th Street New York City, NY
25 West 14th Street In April 2000, Mark Holdings acquired, for approximately $13 million, with an international real estate fund, a vacant 70,000 square foot shell of a building located on West 14th Street between 5th and 6th Avenues in Manhattan. Mark Holdings designed and installed all new storefronts, windows, roof and mechanical systems. The property was then 89% leased to Guitar Center for its East Coast flagship store and to Clay for its new high-end gym/spa concept. In March 2004, Vornado Realty Trust acquired the property for $40 million, representing a 4x multiple on the initial equity investment.
Logan Town Center Altoona, PA
Logan Town Center In October 2007, with its institutional real estate debt fund partner, Mark Holdings signed an agreement to acquire at a significant discount a defaulted $99 million first mortgage and mezzanine loan secured by a new 720,000 square foot, 92% leased regional power center in central Pennsylvania from a major Wall Street investment bank. The center contained 25 national retail tenants including Boscov's, Kohls, Giant Eagle, Best Buy, Michaels Stores, and Staples, with room to construct an additional 50,000 square feet. Upon closing on the loan, Mark Holdings intended to negotiate a release of the personal borrower guaranties and perhaps a small payment in exchange for a deed-in-lieu of foreclosure, or in the alternative, proceed with the foreclosure litigation. Once title was obtained, Mark Holdings would complete the lease-up and development of the remaining space. The agreement required that buyer's due diligence be conducted and the transaction closed in 30 days, immediately prior to the seller's fiscal year end. Because there was rumored to be a potential purchaser for the property that would have paid off the loan at par, the seller insisted on the ability to terminate the agreement prior to closing. In exchange for this atypical seller provision, Mark Holdings negotiated for a significant breakup fee in the event the borrower redeemed the loan with a property sale prior to our closing and the seller terminated the agreement. As Mark Holdings prepared to convert its refundable deposit to non-refundable status, the seller exercised its termination option and paid Mark Holdings the break-up fee thereby providing an infinite return on its equity investment.
Barney's Stores Beverly Hills, Chicago and New York City
In May 2001, a private real estate investor contracted to acquire the three Barney's flagship stores located in California, Illinois and New York for $163 million. The purchase and sale agreement provided for a non-refundable $10 million deposit and a 30-day closing period. Upon signing, the buyer requested Mark Holdings to assist it in raising the necessary debt and equity to close and be joint operating partners. Immediately thereafter, the buyer indicated that it had raised the equity but engaged Mark Holdings to source, structure and close the needed $135 million floating rate acquisition loan. At the time, Barney's credit was viewed unfavorably and there was a pending $15 million payment due from the tenant with no available cash to make it. The challenge in securing the debt financing was to show potential lenders how the real estate was worth more without Barney's as the tenant than with it, so if Barney's did default, it was a positive event. Mark Holdings successfully identified a lender, negotiated the loan terms and documents, and closed the financing within the required 30-day timeframe.
255 Hudson Street New York City, NY
255 Hudson Street Beginning in December 2003, the Company performed preliminary due diligence including subsurface investigations and analyses and then successfully negotiated, structured and contracted for the $18 million land purchase of 243-257 Hudson Street in New York City with a residential condominium developer and an international real estate fund. Construction of the 11-story, 64-unit twin tower design luxury residential condominium commenced in the fall of 2004, and was completed in the fall of 2006. The final sell-out of all but one unit exceeded $95 million and was finished by January 2008.
1480 Forest Avenue Staten Island, NY
In May 1999, Mark Holdings purchased for approximately $1.7 million, a $2.1 million defaulted mortgage loan on a 7,000 square foot Staten Island, NY retail building, with a borrower who had filed personal bankruptcy. Shortly after closing, Mark Holdings was able to get the bankruptcy court to lift the stay of foreclosure and proceed with the foreclosure sale, at which Mark Holdings was the successful bidder. Simultaneously with the pursuit of an eviction of the existing defaulted tenant, Mark Holdings negotiated and signed a new 20-year net lease with Duane Reade. In early 2001, the Company sold the property to a high net worth investor for $2.7 million, representing a 5x return on the invested equity.
Lloyds Shopping Centers Middletown, NY
In October 1999, Mark Holdings signed a purchase contract to acquire for $5 million a 24-acre retail site in Middletown, NY from a bankrupt retail company. The site could be developed with a 200,000 square foot retail center. The purchase contract was approved by the bankruptcy court subject to a Section 363 sale where other bidders would have an opportunity to present higher and better offers, subject to the payment of a breakup fee to Mark Holdings in the event of a higher and better offer. At the sale, Mark Holdings was outbid and received the break-up fee from the overbidder's closing proceeds. The break-up fee represented a 14x return on the portion of the contract deposit funded from equity that was non-refundable.