Over the past two years, Jones Lang LaSalle Retail, a giant in the third-party management business, has encountered a wide range of
Because of its long-term expertise and unique niche in management of regional malls, Jones Lang LaSalle Retail often is appointed by the courts as a receiver for retail properties whose owners have defaulted on their loans. In such situations the original owners often have been running short on funds for some time, and in some cases they may have neglected various property management duties.
If the lender wants to eventually sell the center and believes that its value can be improved through additional
There are also cases where the lender believes the property’s value has been diminished for good. In such instances, the receiver’s job is usually to find a buyer as soon as possible and get the asset off the lender’s books.
In addition to its receivership duties, Jones Lang LaSalle Retail is also picking up traditional management contracts, including the recent acquisition of the 11.2 million sq. ft. third-party management business from General Growth Properties and its recent appointment as asset manager for the Xanadu Meadowlands project in East Rutherford, N.J.
Retail Traffic interviewed Greg Maloney, president and CEO of Jones Lang LaSalle Retail and head of Jones Lang LaSalle’s value recovery services team, about what his staff encounters when taking over a distressed center.
Retail Traffic: When it comes to physical maintenance, can you tell us what shape distressed retail properties are in when you take over the management?
Maloney: Every single property we take over has its own issues. Some are very poorly maintained. With some properties the borrower didn’t have money and the bills were not being paid. It depends on who the owner was, what it was trying to do and how cooperative the borrower and the lender were in working together.
If it were a center where the occupancy has gone way down, where it’s fallen from maybe 80% to 50%, we might see deterioration in all aspects of property management, including maintenance and in security. But I don’t think we’ve come across anything where the property was in such shape.
For the most part, the shopping centers [we take over] are maintained very professionally. The [owners] try to stretch their dollars. For example, instead of maintaining the parking lot every day, they do it every other day. Or they used to mop the floor once a week, and now they mop the floor every other week.