The private equity firm that moved earlier this year to foreclose on Northgate Mall in Durham has bought the struggling shopping mall.
Northwood Investors purchased the mall from Durham-based Northgate Associates for $34.5 million, according to Durham County records.
James C. Adams II, the Greensboro legal counsel for Northgate, said that Northgate Associates decided to sell the property in lieu of a foreclosure. Efforts to reach Northwood were not immediately successful.
In a statement, Virginia Rand Bowman, head of Northgate Associates, confirmed that Northgate Mall was under new ownership.
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“This week Northwood and Northgate Associates came to an agreement to transfer ownership of the mall to Northwood under new ownership known as NW Northgate Mall, LLC,” Bowman said. “This is the end of a legacy for the Rand family, who have owned, managed, and developed Northgate since the late 1950s.” (The mall itself wasn’t built until the 1960s.)
“With the dramatic changes in the retail landscape across the U.S. and the rapid growth of the Durham community,” Bowman continued, “Northgate too needs to be a part of that transformation and Northwood has the resources to make the necessary dramatic changes to the overall development of the property.”
Northgate Mall was initially put under the pressure of foreclosure in the summer, after Northwood, a firm with around $7 billion in assets around the world, acquired the mall’s debt from a previous lender.
Northwood then quickly moved to foreclose on the debt — valued at nearly $62 million after interest — after the mall’s owners, Northgate Associates, defaulted, The News & Observer and The Herald-Sun previously reported.
Bowman said her family will “deeply miss its place at the heart of the Durham retail community.”
Northwood has not said what its plans for the mall are, but Bowman said it is not going out of business.
“This transfer of ownership does not mean the mall is going out of business,” she said. “Control of the property is merely transitioning to NW Northgate Mall, LLC (Northwood). Scheduled events and promotional activities will continue throughout December and Northgate merchants will serve their customers as in any other holiday season.”
Northwood is no stranger to the Triangle. Through its Northwood Ravin subsidiary, the firm has invested in the Carolina Square project in Chapel Hill and the Van Alen project in downtown Durham. Both those projects are a mix of retail and residences. The company also owns the Sears building at Northgate Mall.
The sale would put most of the mall under control of the private equity firm, except for a few parcels.
Duke University took over part of the mall in 2017, buying the old Macy’s wing for $4.5 million, after the retailer closed, and Northgate still owns a strip of shops on the northern edge of the property, according to Durham County records.
Duke has yet to release plans for its space, beyond that it wants to build medical offices there, but the foreclosure of the rest of the mall could affect some of the school’s plans.
“The redevelopment of the mall would obviously have some impact — probably positive for Duke given our investment, but we don’t know yet,” said Scott Selig, head of real estate for Duke University.
Selig said the mall, with a prime location just off Interstate 85 and a few minutes from downtown, is in need of rejuvenation. He added that he has not talked to Northwood about the property.
“The mall is in need of redevelopment, and if anyone is going to invest a lot of money in it, it will help property values and make it a more interesting place to be,” Selig said, adding that he would like to see a combination of residential and retail on the property. “It is more about making a place than taking the space,” he said.
But not everyone is excited about the mall’s potential redevelopment.
At a Durham City Council meeting this month, residents of the nearby Walltown expressed concern about the future of the site and how it would effect their neighborhood.
Brandon Hudson said he’s thinking about the rising property taxes of his neighbors if large condominiums are built on the Northgate Mall site. Hudson also said the existing mall serves as a public square for the community.
“The changes that would draw density there and rising value are what concerns us the most,” he said.
Another Walltown resident was worried about the increased traffic new development could bring.
Durham Mayor Steve Schewel responded saying that Northgate would likely become “some sort of mixed use development.” Schewel said it would have a significant impact on the Walltown neighborhood.
Northgate Mall has existed in some form on Club Boulevard north of downtown Durham since the 1960s. The mall is owned by Northgate Associates, which is controlled by Bowman, who took it over from her father, W. Kenan Rand.
The mall, like many others across America, has been in flux for many years. It struggled as some its largest department store tenants left in the face of competition from internet retailers such as Amazon and from newer malls such as Durham’s Streets at Southpoint.
After Macy’s left in early 2017, Northgate Associates said it would prepare a master plan for the future of the mall. But no plan ever materialized.