Is Westdale for sale? Development ahead of schedule in job creation, property tax goals

CEDAR RAPIDS - The owners of Westdale have listed the shopping center for potential sale.

Westdale, the former 72-acre, 900,000-square-foot regional mall under redevelopment in southwest Cedar Rapids, is owned by A. Shapiro LLC, an investor group, and leased by Westdale CR Ventures, a subsidiary of Denver-based Frew Development Group.

Some of the perimeter lots have been sold to private developers, such as Edgewood Partners of Cedar Rapids, which has constructed three multi-tenant buildings.

John Frew, president and chief executive officer of Frew Development Group, said there is no sale price on the listing.

'We put this out as an invitation to make an offer,” Frew said. 'If we get traction with enough interested parties, we will call for offers and we will see if those offers are even close to what we would accept.

'If they are, we will negotiate. I don't believe that's going to happen for at least a couple of years.”

Frew said more buildings need to be constructed and occupied by tenants to gain the full value of the property. The redeveloped Westdale was designed in 2012 with 35 lots and associated parking, which could be sold separately or as a whole.

In 2013, Frew Development pledged to the city of Cedar Rapids that $90 million will be invested to redevelop the moribund property. The Cedar Rapids City Council agreed to contribute $5 million up front plus additional tax rebates as part of a 2013 development agreement worth $11.7 million.

The city guaranteed a loan of $11.5 million in 2015 and a separate $2.75 million, third-party loan in June 2017 to complete infrastructure work at the former Von Maur building and other site work.

Tax increment financing, or taxes generated based on the increased property value, will be used to pay off the $11.5 million loan.

The city will be removed as guarantor of the loan in June 2020 if Westdale is current in its payments, has net operating income of $925,000 and has $500,000 in cash reserves in excess of the operating reserve.

'We have had a number of companies with TIF agreements acquired in recent months ...

Apache, Diamond V and Rockwell Collins,” Mayor Ron Corbett said. 'In each case, the buyer inherits the TIF agreement and continues to make the payments.

'One of the challenges and struggles that John (Frew) has had to deal with is he is a small developer in a large retail market. Some of the larger developers can put pressure on retailers who want to be at several prime locations.”

Corbett added that, 'John doesn't have that national clout, and that may be one of the reasons he is looking at possibly selling. It's out there for national investors to take a look at.”

Ahead of schedule

A report to the city required by Nov. 1 each year and released on Thursday shows Westdale is running ahead of schedule in terms of the minimum employment and incremental property tax requirements set forth in the 2013 development agreement.

A total of 506 full-time equivalent employees are working at Westdale, which is four years ahead of schedule. In addition to J.C. Penney and Younkers, the shopping center has Burlington, Ross Dress for Less, Shoe Dept. Encore and multiple restaurants in operation.

'We project a $60 million assessed valuation by the end of this year, which is the amount we are required to reach by 2022 - four years ahead of schedule,” said Todd Nelson, chief financial officer and executive vice president of Frew Development.

Frew said the preparation for listing Westdale for sale has yielded benefits in terms of learning what buyers are looking for as an appropriate mix of non-retail and retail development.

'Having 100 percent retail is never a good idea and that's why we are building a hotel,” he said. 'We are still contemplating housing, as we did in the very beginning.”

Frew said the 82-room Tru by Hilton hotel is expected to open in mid-January. A new PetSmart will debut Nov. 4 in a building that will double as the fourth wall of a future retail building.

'The utilities are already in place for that lot, which will allow us to construct an adjacent building much more quickly for another tenant,” Frew said. 'The infrastructure work that we've done over the last two years will really pay dividends in future years.”