New York investment firm buys Owensboro mall

Photo by Alan Warren, Messenger-Inquirer/awarren@messenger-inquirer.com East entrance of Towne Square Mall on Monday at 5000 Frederica Street. Kohan Investment Group of Great Neck, New York, has bought Towne Square Mall and its 35.4 acres for $2.9 million.

Kohan Retail Investment Group of Great Neck, New York, has bought Owensboro's Towne Square Mall and its 35.4 acres for $2.9 million.

It also bought two other properties around the 40-year-old mall -- the land that BB&T's south Frederica branch sits on, but not the building -- and a triangle-shaped slice of land on the south side of the mall property for $1.1 million, making a total of $4 million.

As recently as 2016, the property was assessed at $28.4 million.

"There was a lot more traffic back then," Mike Kohan, president of the company, said Monday.

The Macy's store was not included in the sale.

It's owned by Macy's.

"I hope it's going to be successful," Kohan said. "What I like about it is it has no competition and it's on the highway. It also hasn't had hands-on ownership for a while."

Kirklands has left the mall for a new location in Gateway Commons off Kentucky 54. And others may be following.

The company's website says Kohan -- also known as Mehran Kohansieh -- owns 23 malls across the country, including Towne Square Mall.

Kohan's website says his company "sees the future of aging malls as a place of mixed use that is more than just for shopping. They are social settings where people interact with one another and small businesses can get a boost in a public and well-trafficked platform. Everyone has a need to build friendships and seek a community setting where entertainment, shopping and food come together."

He said he sees the mall's future as mixed use.

But that doesn't mean residential, Kohan said.

"We're not developers," he said. "We aren't building apartments."

Kohan said he envisions professional offices -- doctors, dentists, accountants -- opening in the mall.

Candance Brake, president of the Greater Owensboro Chamber of Commerce, said, "We look forward to learning more about the new buyer and his plans and wish him the best. Southtown has played and continues to play such an important role in our retail. And a healthy retail sector is a major piece of our economy."

"Malls can no longer depend solely on retail," Kohan said.

He said he also wants to attract local businesses, not just national chains.

"We'll work with them," Kohan said. "We need more foot traffic out there."

He said wants to see entertainment at the mall to draw traffic.

"Foot traffic helps the food court," Kohan said.

Mediterranean Corner 6, a restaurant, opened earlier this year in the mall, and Taco Tuesdays is planning to open in the old Ruby Tuesday's near the entrance.

There are already several locally owned stores in the mall along with a couple of fitness businesses and even a church -- Cross Community Church.

But Monday, there were 16 vacant storefronts in the mall.

'Malls are evolving'

"Malls are evolving, and as time goes on, they are no longer just a tent to house box stores and chains, but are home to more local small- and medium-sized businesses of all stripes," Kohan's website says. "Large spaces offer opportunity for fundraising events, festivals, farmers markets, miniature golf, dancing, concerts, banquets, theater and virtually any social gathering all under one roof with protection from the elements."

The company buys only distressed malls that are well past their prime and tries to revitalized them.

Sometimes, it works. Sometimes, it doesn't.

News stories from cities where the company owns malls show that Kohan's company has had a lot of problems.

In 2014, The Herald-Palladium of St. Joseph, Michigan, reported that the Woodville Mall in Northwood, Ohio, was acquired by Kohan Retail Investment Group in 2009. The story said it was torn down in March 2014 by court order after inspectors found leaking ceilings, black mold, standing water, crumbling asphalt and other violations.

The story said, "He owns the Northland Mall in Worthington, Minnesota, and was reported to owe back taxes on the property. The local CBS television affiliate reported in April that the mall looked more like a construction site than a shopping center, with 'a leaky roof, buckets lined up on the floor and caution tape blocking off some areas.' "

Officials in Matteson, Illinois, tried to get Kohan's Lincoln Mall boarded up over safety violations, and then put the property into receivership, with an order that the owner pay for repairs, the story said.

In 2015, money.cnn.com reported, "The power was shut off Thursday morning at the Rotterdam Square Mall (north of Albany, New York) after the owner (Kohan Retail Investment Group) failed to pay the electricity bill."

But he's had successes too, he said.

The Herald-Palladium reported that Tulsa officials were pleased with improvements Kohan made to the Tulsa Promenade.

"We'll try anything to make it work," Kohan said.

When Towne Square Mall opened on March 1, 1978, an estimated 5,000 people poured into the mall to see the wonders offered in the new indoor shopping center.

It was the largest mall in western Kentucky back then -- even larger than anything in Evansville.

It drew so many shoppers that other stores wanted to be near it.

And soon the "South Frederica" area was the center of Owensboro's retail economy.

But the mall struggled in recent years as more "big box" stores opened around the city and Kentucky 54 began developing as a commercial center.

In December 2014, Sears, the mall's largest tenant with 122,000 square feet out of the mall's 502,749, pulled out.

And by summer, there were a dozen or more vacant storefronts.

Lakestar Properties of North Howell, New Jersey, the mall's owners back then, fell behind on payments to the tune of $27.639 million.

And U.S. Bank National Association took over the mall in February 2016 at a foreclosure sale at the courthouse.

It has tried to find a buyer since then.

Lakestar bought the mall, built by David Hocker & Associates of Owensboro, in 2007 from Aronov Realty Management Inc. for $29 million.

Aronov had bought it from TS Partners, a partnership between the Southwestern Bell Corp. Master Pension Trust and Heitman Real Estate Fund III, with NationsBank of Texas, for the same amount in 1998.

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