$22M plan sets lavish vision for Colonie Center

By ALAN WECHSLER Business writer
Saturday, April 23, 2005

COLONIE -- When it purchased Colonie Center two months ago, Feldman Mall Properties Inc. of Phoenix promised a 100,000-square-foot addition with a new movie theater.

But the extent of its commitment to the center wasn't made fully clear until Feldman, a publicly traded real estate investment trust, or REIT, filed its 10-K annual report with the U.S. Securities and Exchange Commission.

In it, the company describes a lavish vision for an improved mall and a hefty price tag: $22 million.

Feldman, which paid $82.2 million for the 1.2 million-square-foot regional mall in February, was organized last summer as a REIT that specializes in buying underperforming malls and making them more profitable and more popular. In addi tion to Colonie Center, it owns malls in Tucson, Ariz.; Bloomingdale, Ill.; and Harrisburg, Pa.

The 10-K describes Colonie Center's biggest competitor, Crossgates Mall in Guilderland, as a shopping center that caters largely to teenagers. The Colonie mall, by contrast, seems to be making a stronger push to a more mature clientele.

Along with a new Regal Cinema movie theater with stadium seating, Colonie Center is slated to get such amenities as an indoor aquarium, television-viewing areas with leather seating, a large children's play center, and indoor and outdoor restaurant seating. Feldman even is considering a full-time piano player in a prominent location, "to help add to the lifestyle theme."

"It sounds like a good idea to me," said Jeff Pfeil, a principal of J.W. Pfeil & Co. Inc., a retail leasing and development company in Saratoga Springs. "Years ago, it was the mall before Crossgates was built. Sometimes it just takes a new owner with a different vision to make it all click."

Colonie Center was built in 1966. It has about 120 stores, including anchors Macy's, Sears, Boscov's and Christmas Tree Shops.

Feldman wants to add a digital color video screen to the mall that will notify the public about special events. And it wants to attract four more "junior" anchor tenants, to join music and video retailer FYE and college-label clothier Steve & Barry's.

Colonie Center also will get new entrances and new common areas.

Of the $22 million in renovations, the company expects to spend about $9 million on the 100,000-square-foot, two-story expansion. Allocation of the remainder of the money was not outlined in the 10-K.

But by the time the renovations are completed - in about three years - Feldman hopes to elevate the mall from a Class B to a Class A property, raising its tenants' average sales per square foot to more than $350.

According to the 10-K, the mall had an average occupancy rate of 96 percent last year, including anchor stores and temporary leases.

The purchase agreement included a promise to add up to $9 million to the price tag if seller Blackstone Group L.P. of New York City is able to land new permanent tenants before June 30. The exact number of new leases required to capture the added money was not specified, and officials with Blackstone and Colonie Center declined comment.

Officials from Feldman, which has been working on the agreement since September, could not be reached for comment Friday.

The 10-K also describes what Feldman calls "unusually strong anchor tenant sales," which it says can be used to leverage higher sales for other retailers at the mall, "and thereby grow the property's rental revenue," which will benefit shareholders of the REIT.

For the mall's four anchor tenants, Feldman estimated that sales last year totaled $60 million at Macy's, $49 million at Sears, $28 million at Boscov's and $23 million at Christmas Tree Shops.

Alan Wechsler can be reached at 454-5469 or by e-mail.

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