KEARNY— Most people go to a mall to shop.
And shop like mad, one particular buyer did, indeed. This patron bought the entire mall and suddenly, the price of real estate on Kearny’s west side is beginning to zoom upward.
Specifically, it’s the 139,000-square-foot Kearny Square mall, anchored by BJ’s, with a number of smaller retailers as additional tenants, that has sold for $45.5 million — well above its current-assessed value of about $8.4 million and market value of more than $29 million.
The property transaction was logged June 12 by the Hudson County Register’s Office, but the information didn’t become available to Kearny until last week, according to town tax assessor John Peneda.
A real estate services firm, Cushman & Wakefield, announced the property’s change of hands earlier this summer and identified the buyer as Benthall Kennedy, a Sun Life Investment Management Co., although the deed recording the sale listed the new owner as MEPT Passaic Ave. LLC of Bethesda, Maryland.
What’s the connection?
As explained by the firm’s website, MEPT (Multi-Employer Property Trust) and affiliates are “core, open-end private equity real estate funds [with] $9.5 billion in gross assets” and Benthall Kennedy, headquartered in Seattle, “serves as the real estate investment advisor and investor relations provider to the Fund.”
MEPT, founded in 1982, controls “a diversified portfolio of institutional-quality real estate assets” of more than 100 investments covering 25 “major U.S. metropolitan markets.”
Among its more recent acquisitions is Kedron Village II, a 157,185 square foot retail center in Peachtree City, Georgia, 30 miles southwest of Atlanta, which was purchased for $30.9 million. In 2011, MEPT acquired Kedron Village I, a 93,356 square foot, grocery-anchored retail center.
MEPT’s portfolio also includes investments in office buildings, warehouses, flex/research and development facilities and apartments, its website says.
Representatives of Cushman & Wakefield, the Chicago-based real estate services firm that brokered the Kearny Square transaction, have said that many “regional and national institutional and private buyers” participated in bidding for the property.
The fact that the mall has retail tenants offering wares and services not typically available through online purchase and Passaic Avenue has attracted the development of hundreds of new residential apartments whose future occupants are seen as likely mall patrons, strengthened the attractiveness of the site for a buyer, C&W representatives said.
The recent disclosure of the Kearny Square property transaction has prompted Peneda to take another look at his calculations for the land and improvements at the 10.27-acre site, particularly in light of the former property owner — DVL Holdings LLC — having filed a tax appeal now pending in State Tax Court.
Kearny collected $897,496 in taxes for the property in 2017; however, based on a lower tax rate struck for this year, the town projects it will pocket $885,423 for 2018.
But now, based on the recent sale, Peneda said he was contemplating “looking at possibly doing an added assessment [in October] or a counter-appeal.”
The BJ’s mall case is among 15 or so other commercial appeals awaiting action by the State Tax Court — unless the owners and town can work out settlements.
Heading the list is Kearny vs. PSE&G, whose 32 lots the town has currently assessed at roughly $28.9 million, with a market value of about $76.7 million. The town, which contends the state has been holding back the full amount of energy tax receipts it is owed, has engaged expert appraisers to review each property to come up with new estimates. Currently, the town gets about $18.4 million annually in energy tax revenues.
Other businesses challenging their assessments include Kuehne Chemical, Walmart and Straus Communications, which owns a radio transmission facility in the meadows on the north side of the Belleville Pike that sends signals for WMCA and WNYC.
The signals travel up and down the entirety of the east coast, especially at nighttime.
The oval-shaped property is listed on town tax records as 36.49 acres, mostly underwater, with an assessment of $540,300 (market value of $1.9 million) and generating yearly taxes of $57,839.
In other real estate news, a 5-acre Kearny meadows property at 76-104 Third Avenue, off Route 280, containing a 100,400-square-foot industrial complex with warehouse and office space. was acquired by RHS Hope LLC of Newark for $6.5 million, according to Peneda.
