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EATONTOWN, NJ-A joint venture of Vornado Realty Trust, the Kushner Cos. and Ashkenazy Investment Co. will plunk down $164.7 million to buy the 1.5 million-sf Monmouth Mall, a super-regional enclosed shopping complex here. The seller is Equity Properties and Development Co. of Chicago, owner of the 42-year-old property since 1977.

Under the partnership arrangement, Paramus, NJ-based Vornado will take a 50% interest and be the managing partner, with Florham Park, NJ-based Kushner and New York-based Ashkenazy splitting the rest. According to a statement issued by Vornado, it has made a $7 million equity investment in the venture and has also provided it with $23.5 million of preferred equity yielding 14%. The rest of the purchase price is being financed by the partnership with floating rate debt with a three-year term and two one-year extensions.

Opened in early 1960 as an open mall by now-defunct Arlen Shopping Centers, the 90-acre complex at the intersection of Routes 35 and 36 underwent a major expansion and was partially enclosed in 1975, adding a second level. Equity substantially renovated it in 1996, completing its enclosure, adding a food court and 77,000-sf, 15-screen Loews Multiplex Theater, and taking advantage of a significant lease roll-over to make the tenant mix more upscale.

Currently 93% occupied by about 150 retail tenants, Monmouth Mall is anchored by Macy’s, Lord & Taylor, JC Penney and Boscov’s department stores. The property generates an estimated $400 per sf in annual sales.

“This purchase provided a unique opportunity for us to enhance our commercial portfolio with a dominant super-regional mall in one of the state’s most affluent areas,” Richard Stadtmauer, managing partner and vice chairman of Kushner, says of the property, the fifth largest mall in the Garden State. “Based on recent performance and projected demographics for the area, the mall’s potential is tremendous.”

The new owners say they plan to expand it, but would offer no specifics. According to a published report, however, Kushner has already filed applications with local officials for four separate expansions totaling 130,000 sf. Two would be directly off the existing mall, while the two others involve freestanding pad sites, according to reports.

Vornado, of course, is better known for its stable of office towers, mostly in Manhattan, but started out in the late ’60s as a retail company operating the Two Guys chain of discount stores. And while Kushner may be known mostly as a residential developer with 24,000 housing units, the privately owned company has been quietly growing its commercial portfolio to more than 7.5 million sf of office, industrial and retail.

Ashkenazy Investment Co., finally, owns and manages six million sf of retail and office properties, and the Monmouth Mall buy marks its third such deal in the last year. “Putting this deal together brings us closer to achieving our goal of acquiring $1 billion of retail real estate,” according to Tom Valenti, an Ashkenazy principal.

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