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For the past few months, it hasn’t been hard to find retail horror stories. From the complete shut-down of enclosed malls, the dramatic drop in retail sales, the rise in CMBS delinquencies for the retail asset-class and the ever-growing list of retailers filing bankruptcy including JCPenney, Nordstrom, J. Crew, 24 Hour Fitness, Gold’s Gym, California Pizza Kitchen, and GNC, there has been plenty of news about the retail industry…most of it bad.

However, one retail developer has not only successfully managed its portfolio through the COVID-19 (coronavirus) pandemic, Heidenberg Properties Group has launched two redevelopment projects across different markets in its portfolio, utilizing two different strategies.

The first is the Hershey Square Shopping Center located in Hummelstown, PA. Upon the departure of Kmart from 107,000 square feet in March 2019, Heidenberg Properties began marketing the anchor space for lease. Despite having an anchor in Kmart that was neither a draw nor a driver of cross-shopping, the balance of the tenants at Hershey Square thrived. The 55,000 square foot Weis Markets, which added a beer garden in 2018, the 10,000 square foot Fine Wine & Good Spirits-Premium Collection, as well as Panera Bread, Five Guys, Visionworks, and Applebee’s all contributed to making Hershey Square the center of retail activity in the Hummelstown market. When combined with Hershey Square’s location at the convergence of Routes 422, 322 and 39, as well as being less than 3 miles from Hersheypark and its 2 million annual visitors, Heidenberg Properties knew that the former Kmart space would be attractive to a variety of national retailers. Although filling over 100,000 square feet of retail is never an easy task, the developer was poised once again to add value at the shopping center.

 From November 2019 through May 2020, Heidenberg Properties executed leases for over 90,000 square feet with companies comprising a “who’s who” of today’s leading retailers. In what the developer has been calling “Hershey Square 2.0,” Heidenberg Properties has entered into new ten-year leases with T.J. Maxx, Big Lots, Five Below, and Planet Fitness, and is building a new pad for Chipotle (including a drive thru and “Chipotlane”) in front of the Weis Markets. In addition, Weis added additional term to its lease, further demonstrating its confidence in the center. According to Heidenberg Properties’ VP of Real Estate Ken Simon, “These are exactly the types of opportunities we seek when we make acquisitions. We knew that this space would be desirable to top tier retailers and we couldn’t be more excited about the new tenant line up. The mix of treasure-hunt, value and experiential retailers that we are adding will well-position this property for the long term.”

 To effectuate the redevelopment, Heidenberg Properties refinanced the property with Provident Bank. Provident Bank, headquartered in Iselin, NJ provided the capital to take out the prior CMBS debt, as well as construction financing for the re-tenanting. While the capital markets have been largely stagnant, Heidenberg Properties closed on this $32M refinancing in July and will commence construction in September. All new tenants are projected to be open and operating by Spring 2021. Provident Chief Lending Officer Walter Sierotko stated, “Refinancing in this environment is primarily sponsor-driven, especially as it relates to redevelopment. Heidenberg Properties and its partner, Strategic Real Estate Partners have the experience and track record to sufficiently mitigate execution risk. We are confident that these developers will deliver on their business plan and we are pleased to bring them in as new customers to the bank.”

Upon completion of the tenant fit-outs, Heidenberg Properties projects Net Operating Income to increase by over 22% from its previously stabilized number.

The Berlin Mall in Berlin, VT represented an entirely different sort of challenge for the New Jersey-based developers. The Berlin Mall boasts thriving anchors in Walmart (one of only five in Vermont), Kohl’s which opened in March 2016, and the more recently added junior anchor Planet Fitness in December 2017. Despite strong performing anchors however, the Mall’s inline tenants have experienced mixed results. The Mall’s owners were convinced that in order to survive long term in this challenging environment, a new approach was required. Taking advantage of the property’s size (over 65 acres), proximity to major highways such as Routes 89 and 62 and major employers such as the Central Vermont Medical Center, Heidenberg Properties Group entered into a unique partnership with Dousevicz, Inc. to develop 98 units of Independent, Assisted Living and Memory Care units on one of the Mall’s outlots. The Dousevicz family is a vertically-integrated owner and operator of over 500 senior housing units throughout Vermont and being equally familiar with Vermont’s unique Act 250 Permit process, represented an ideal partner. By adding a residential component located on land adjacent to the existing mall buildings, Heidenberg Properties will be taking its first step towards creating a vibrant town center, where people of all ages live, work and play.

While the partnership was memorialized prior to the Covid-19 pandemic, the partners received their official Act 250 Permit just weeks before the pandemic hit. While adjusting to the “new normal”, Dousevicz, Inc., obtained its Vermont construction permit for Chestnut Place (the official name of the development) in May and commenced construction in June. Additionally, the Town of Berlin is pursuing a “New Town Center” designation for the mall property, as well as other adjacent lands, with the hopes of creating a walkable, pedestrian-friendly center that may include other housing, office and community uses. Most recently, the 34,000 square foot JCPenney location announced its closing, but the developers are signaling that a compelling replacement will soon follow as well as innovative uses for other outlots.

Heidenberg Properties attributes its success in the pandemic to the active engagement of its tenants, service providers and lenders. The developer understood that each of these components were uniquely affected by the various stay-at-home orders and other government restrictions and were determined to find mutually agreeable, if not ideal solutions. The upside was that this dislocation of “normal” created opportunities and Heidenberg Properties was determined to take advantage of them. In addition to redeveloping Hershey Square and creatively adding uses to the Berlin Mall, Heidenberg Properties is in the process of negotiating new leases to spur development across its portfolio. According to Chief Operating Officer Jason Lazar, “The COVID-19 (coronavirus) pandemic has brought uncertainty, stress and disruption to virtually every walk of life. It was critical for us to rally as a team, engage all of our stakeholders and work tirelessly to manage through it-together. However, we are in the business of adding value and that means both taking advantage of and creating opportunities to make our portfolio stronger. At Hershey Square, the Berlin Mall and other properties in the portfolio, there have been isolated victims, but those situations have allowed us to fine-tune our tenant-roster, add the type of retailers and non-retail users who have successfully evolved, and strengthen us for the years to come.”

About Heidenberg Properties

Heidenberg Properties is a full-service real estate development company focused on the acquisition and development of open-air shopping centers, net leased properties, and secured note purchases in the Eastern United States. The group is actively seeking new acquisitions and development opportunities. To learn more, visit



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