Sour Economy Puts Kibosh On Brookfield Mall Redevelopment Plan
Brookfield Properties has called off its plans to redevelop the site of the Burlington Town Center mall in Burlington, Vermont. The project had been in the works since 2017, when Brookfield cleared the site.
The real estate giant had planned to develop apartments, a 10-story office building and a retail component on the site, which is in Downtown Burlington. In backing out of the deal, Brookfield said it is selling its interest in the project, CityPlace Burlington, to Devonwood Investors, its local partner.
Brookfield apparently concluded that the return from the development wasn't enough to justify going forward.
“We made a lot of progress over the past three years, completing the assembly of the site and progressing approvals, but the long-term nature of the next phase of this development doesn’t fit with our funds mandate,” a Brookfield spokeswoman told The Wall Street Journal.
The city of Burlington was irked by the withdrawal of Brookfield from the project.
"After consultation with City Council President Max Tracy, I directed our attorneys to issue a default letter documenting Brookfield’s failure to perform pursuant to the Development Agreement and alleging bad faith and fraud," Burlington Mayor Miro Weinberger said in a statement.
In the default letter, the city castigated the company: "As a result of its breach, BTC [Mall Associates, a Brookfield company] will not be able to construct the Public Improvements in sufficient time to be eligible for reimbursement in accordance with the Development Agreement ... The City has and will continue to suffer harm resulting from BTC's breach, has been denied the benefit of its bargain."
Brookfield did not respond to a query from Bisnow on the matter, but reportedly returned fire after receiving the missive.
"We are deeply troubled by your letter’s references to fraud and misrepresentation with respect to our conduct,” Brookfield Residential President Adrian Foley said in a letter to the city, as reported by VTDigger.
“Through the many challenges faced by all development projects, and working closely with you and your civic colleagues and stakeholders, we remained committed to achieving the development goals, continuing to invest in the Project in the face of these obstacles,” Foley said.
The fracas over the redevelopment of a former mall in Vermont comes when the economic underpinnings of many malls are collapsing, as major tenants, already on the edge before the coronavirus pandemic, suffer bankruptcies that will contract or eliminate their store counts.
"The common denominator is debt,” BMO Capital Markets analyst Simeon Siegel told Bloomberg. “Everyone took on massive amounts of liquidity.”
The most recent chain to file Chapter 11 was Tailored Brands, which owns Men's Wearhouse and JoS. A. Bank. Department store Lord & Taylor has also gone bankrupt, as did Ascena Retail Group late in July. Its brands include Ann Taylor and Lane Bryant.
Tailored Brands, which has about 1,400 stores, will close as many of 500 of them in its restructuring. Lord & Taylor has about 40 stores, many of them in malls, though how many of those will close isn't certain yet. Malls also stand to take blows with the bankruptcy of Neiman Marcus and JCPenney.
Ascena, whose stores are also well represented in shopping malls, will slash its store count from about 2,800 to 1,200 as the result of its bankruptcy, USA Today reports.
Contact Dees Stribling at dees.stribling@bisnow.com.
