DDR, Coventry Buying 1M-SF Spectrum Mall

Neither Developers Diversified nor Coventry returned calls seeking comment on the deal and G. Scott McCormack, senior vice president for acquisitions with Grossman Co., said his firm would not comment. According to a press release issued by the new owners, the partnership will pursue additional redevelopment of the property which will significantly change its current layout.

Located along Bethany Home Road between 15th and 19th avenues, just east of Interstate 17 in the city's north central submarket, the mall--formerly known as the Christown Mall--has been plagued by redevelopment problems in recent years that forced several investors out of the project. In October 2003, NY-based Eastbourne Investments Ltd. sold its interest in the 96-acre land rights to Kimco-De-Rito Gilbert Fiesta LLC in Gilbert for $13 million. At the time of that sale, Eastbourne's Frank Egan said his firm anticipated doing a major repositioning of the mall, but could never accomplish that goal.

Eastbourne initially purchased the land rights to one of the area's largest malls in a joint venture with locally based developer Kitchell Development Co. and De Rito Partners, a locally based retail brokerage firm, in 2000. The partnership planned to put about $42million into improvements for the center's repositioning on the city market. A spokeswoman for Kitchell said the firm sold off its interest in the mall "awhile ago." Marty De Rito with De Rito Partners did not return calls to his office seeking comment.

The mall, about 88% leased, is anchored by Wal-Mart, Costco, Dillard's, PetsMart, Ross Dress for Less, Hometown Buffet, Walgreen, Bank of America and Harkins Theater. Built in 1961 as an enclosed regional mall, the property was expanded in 1973 and 1977 to add the Harkins Theater and Dillard's. It was partially redeveloped in 1995 when one of the original anchors was demolished and replaced by a Wal-Mart store, which was turned into a super center in 2003. Costco joined the lineup in 2000 when another anchor store was demolished.

The mall represents the third investment of the Coventry Real Estate Fund II, formed with several institutional investors and Coventry, which acts as investment manager. DDR co-invests 20% in each joint venture and is responsible for the day-to-day management of the properties.