Mall Sees Switch in Tenants Following Kmart Close

SOUTHFIELD, MI-A Meijer department store will replace the closed Kmart at Tel-TwelveShopping Center here, according to Ramco-Gershenson PropertiesTrust, which is also based in the city.The 128,000-sf Kmart was not selling well, and was closed as part of thecompany’s bankruptcy filing.

Ramco-Gershenson officials said they will have to write off $3 million inrent from Kmart, thus lowering their fund expectations in the second quarterby 20 cents per share.

The new Meijer will be about 195,000-sf. The retailer has 156 stores inIllinois, Indiana, Kentucky, Michigan and Ohio.

Dennis Gershenson, president and CEO of the SouthfieldREIT, said the Meijer will complement the mall’s new other anchor, Lowe’sHome Improvement.

“We are very pleased to be replacing an under performing Kmart with one ofthe most successful concepts in promotional retailing. We feel this changewill broaden the customer appeal, positively impact leasing activities andimprove the credit-quality of the income at the shopping center, ensuringlong term shareholder value,” Gershenson said. “Although the lease has beenassigned to Meijer from Kmart, the details surrounding the assignmentnecessitate that we treat this for accounting purposes as a new lease, andthus we are recording a one-time, non-cash write off of the Kmart straightline rent receivable. It is important to note, however, that our annualrental stream will remain virtually unchanged.”

Ramco-Gershenson officials said the decision to incur a one-time, non-cashcharge was based on a number of factors that led the Company to believethat, for accounting purposes, the assignment should be treated as atermination of the Kmart lease and recognition of a new agreement withMeijer.