Kingsport!: Fort Henry Mall Renovation, New Retailers On Tap For Tennessee Shopping Center

SOMERA CAPITAL MANAGEMENT ACQUIRES FORT HENRY MALL

RENOVATION, NATIONAL RETAILERS ON TAP FOR TENNESSEE SHOPPING CENTER

Los Angeles, CA – Somera Capital Management, a private equity real estate investment company has acquired Fort Henry Mall in Kingsport, Tennessee. This is the third mall Somera Capital Management has acquired in the past 12 months, and the first mall to be sourced from the company’s newly established Washington, DC office. The purchase demonstrates the firm’s strategy to acquire underperforming and capital-deprived properties that have failed to meet the demands of local consumers.

“Kingsport is an incredibly strong and dynamic market that is currently undeserved by retail,” says Steve Plenge, executive vice president of Somera Capital Management. “There’s an opportunity to add significant value to Fort Henry Mall and to strengthen the mall’s performance and retail offerings. We will be working closely with the community to determine what merchandising will best serve area residents.” Plenge and Charlie Christensen, vice president, will direct the renovation and expansion of Fort Henry Mall, which will include many of the elements commonly found in Class-A mall properties.

Fort Henry Mall was targeted for acquisition due to its strong fundamental real estate value, growing sales, positive leasing momentum, healthy regional economic conditions, and the opportunity to maximize the property with additional retail. The seller was represented by David Robinov and Michael McDonald of Eastdil Secured.

Somera Capital Management has awarded General Growth Properties the management and leasing contract, however, all existing mall employees will be retained for management and day-to-day operations. General Growth Properties operates two other malls in Tennessee: Northgate Mall in Chattanooga and Stones River Mall in Murfreesboro.

Fort Henry Mall—located in the foothills of the Blue Ridge Mountains—is in the heart of the Tri-Cities region, which includes Kingsport, Bristol, and Johnson City. At 530,446 leasable square feet, Fort Henry is the only regional mall in Kingsport and is 25 miles from its nearest competitor.

“Kingsport is the most affluent city in the Tri-Cities region and there’s a great demand among residents for more sophisticated retailers,” says Tom Falatko, senior vice president of Somera Capital Management. “We’ve assembled a top-notch national leasing and development team, which will focus on redeveloping Fort Henry Mall with high-quality merchants.”

Fort Henry Mall was built in 1976 and underwent renovations in 1989 and 2005. Located at the intersection of Memorial Boulevard and Fort Henry Drive, the mall has an excellent location and attracts shoppers from Kingsport, Bristol, Johnson City, and other surrounding communities. The mall is anchored by Belk, Belk Home & Kids, JCPenney, and Sears. It has a popular and diverse mix of retailers including American Eagle, Aeropostale, Bath & Body Works, Victoria’s Secret, Sunglass Hut, as well as an 11-theatre Marquee Cinema. The shopping center is 95 percent leased.

Fort Henry Mall is the eighth successful mall acquisition for Somera Capital Management since it began targeting the retail asset class in 2002. It recently acquired Northwest Plaza outside of St. Louis, MO and Laurel Mall in the Washington, DC/Baltimore metro area. The firm also owns Metrocenter, a 1.4-million square foot shopping center in Phoenix.

Somera Capital Management, LLC, founded in 1994, manages a diversified portfolio of private equity real estate investments throughout the United States. With offices in Santa Barbara, Los Angeles, Washington, DC, and Denver, the company identifies and consummates unique value-added investment opportunities with local or specialty operating partners. Since Somera Capital Management’s formation, the firm has acquired and managed 57 assets with an aggregate cost basis in excess of $1.7 billion.