Two New York-based firms, Contrarian Properties and Spinoso Real Estate Group, have acquired the Crossroads Center in St. Cloud for just under $80 million in a deal revealed in public documents Wednesday.
This sale is the second of 2024 for the mall, as in January a group called Trigild was appointed receiver of the property after the previous owner, Brookfield Properties, had not made a mortgage payment since March 2020.
At nearly 900,000 square feet, Crossroads Center is the largest shopping mall in the state outside of the Twin Cities. Its stores include J.C. Penny, Macy’s and Scheels. According to Stearns County property tax records, Target owns its location connected to the mall.
There is a balloon payment for the property of $79,867,741, the same amount the building was purchased for, that kicks in in May 2027.
The property straddles the border of Waite Park and St. Cloud.
Matt Hazelton, a senior director of Capital Markets at JLL said the acquisition by Contrarian and Spinoso is a debt assumption from Trigild (the court-appointed receiver), so the actual listed cost “isn’t completely reflective of the actual situation going on” which is why it’s such a high price.
“I suspect what’s going on here, the existing lender had to approve these guys as a new borrower and work out some sort of deal with them,” Hazelton said in an interview Thursday. “I would bet that there were no proceeds that were transferred over to the previous owner. So all of their equity was gone.”
As for the actual market value of the property, Hazelton said he is hesitant to put an amount on it but said the $27.6 million Maplewood Mall sale in June 2022 or the $31 million Northtown Mall sale in August 2023 is more indicative of the current market.
According to a Catylist listing for the mall, located at 4101 W. Division St. in St. Cloud, the property is 100% leased. Hazelton said he doesn’t know the lease terms on the anchor tenants so he isn’t exactly sure of the strength of the property’s leasing, but said receiverships don’t bode well for tenants.
“Typically when properties are in receivership, that’s not a great thing for lease up because there’s not as much money to keep properties up and people aren’t as proactive,” he said. “Malls are expensive, they’re capital-intensive properties to run.”
Hazelton said the property will likely benefit from a change of ownership.
“Hopefully the new owner can have a good plan for it and could revitalize it and come up with a good strategy to make it sustainable moving forward,” Hazelton said.
In a press release, Spinoso said it would bring “a wealth of experience” in maximizing the Crossroads Center’s potential and would transform it.
Though this appears to be Spinoso’s first foray into Minnesota real estate, the group owns and manages 41 malls throughout the country according to its online portfolio, including malls in Wisconsin and Iowa.
“We are excited to introduce our unique leasing and development focus to Crossroads Center,” Carmen Spinoso, the group’s CEO said. “Our goal is to evolve, redevelop and establish Crossroads Center as the premier shopping and entertainment destination in the St. Cloud area.”
According to the press release, both Contrarian and Spinoso will handle the management, leasing, redevelopment, operations and marketing of the St. Cloud mall.
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