CHARLOTTE, N.C. -- The main section of Eastland Mall was bought by a Houston-based company for $2 million - far less than the $7.7 million the city of Charlotte considered paying for the mall in November and the $54 million sale price in 1998.
Boxer Property only bought the main section of the mall - not the four empty anchor stores, which are separately owned.
The $2 million purchase price includes 16 acres, the 512,000-square-foot mall building and some smaller tracts at Eastland, including a former Harris Teeter store.
The sale price is less than $4 a square foot.
Boxer Property President Andrew Segal wants the city of Charlotte to help him redevelop the site by buying the empty anchor stores. Some city officials said they are intrigued by the idea, but won't comment until they hear a specific proposal.
Boxer last year took over management of Plaza Fiesta Carolinas, a Hispanic-themed shopping center in Fort Mill, S.C.
Segal said last week that with the city's help, he could transform the Eastland site into a walkable community of stores, offices and homes, which is the city's vision for the 90-acre site. If the city doesn't help him, he said he will work to reopen Eastland with new stores.
Eastland is scheduled to close Wednesday.
Last fall, with the mall faltering, the City Council authorized staff to buy the entire mall. The plan was to consolidate the mall's multiple owners, making it easier for a developer to redevelop the land.
City staff had contracts ready with the owners to buy the mall and anchor stores for $22.24 million.
In that sales price, the city had a tentative agreement to buy the main section of the mall for $7.74 million. That is the piece of the mall that sold last week to Boxer Property for $2 million.
In November, the City Council reversed course. Outgoing council member John Lassiter suggested that city staff offer instead $7.4 million for the entire mall, including the anchor stores. At that price, the city likely would have bought the main section of the mall for about $2.6 million.
But city staff said the anchor stores and Miami Beach-based LNR - the owner of the main section of the mall - rejected that offer.
"I knew we were going to pay too much," Republican council member Edwin Peacock said Monday night when told about the $2 million sales price.
Tom Flynn, the city of Charlotte's economic development director, said the low price paid by Boxer was due to the owner realizing there were no other buyers.
Ohio-based Glimcher Realty Trust bought the main section of Eastland in 1998 for $54 million. But it relinquished Eastland to its loan servicer, LNR, last September rather than continue to make payments on its mortgage.
The outstanding principal balance on the loan was $42.2 million as of April, when the property officially entered foreclosure, according to court documents. It was previously set for auction on July 30.
LNR realized no one else was coming forward, and the city wasn't coming back, Flynn said.
He said LNR has a number of distressed commercial properties nationwide, and was a motivated seller.
When the city negotiated a purchase price of $22.24 million last fall for the entire mall, including the anchor stores, Flynn said the city knew it was paying a premium. But it did so to have complete control of the mall, making it easier to redevelop.
Eastland's ownership structure is thorny. If Boxer Property were to change the concept of the mall, perhaps by gutting part of its building and adding offices, the other Eastland owners could veto that plan, Flynn said.
That could make it difficult for Boxer Property to dramatically redevelop the site unless it also controlled the anchor stores.
Belk, Dillard's and Sears own their vacant buildings outright. The empty Burlington Coat Factory store is owned by Steven Fields, a Florida resident who said he owes $3.6 million on his loan for the building.
The Eastland sale comes as area commercial property prices have fallen between 10 and 40 percent due to the economic downturn, with some dropping even further. A University City office complex sold this year for 30 cents on the dollar. And real estate experts expect yet more troubled properties to hit the market and sell cheap.