Perhaps the gathering storm clouds over The Orchards Mall this afternoon were more than simply weather related. Despite the best efforts of a spirited young woman to get the mall’s absentee owner to live up to promises made and bills unpaid, the shopping center may be on the brink after all.
The ill-fated run of Orchards Mall Manager Christine Waterhouse has abruptly come to a halt after less than four months at the helm. While her departure was self-invoked, it carries some serious undertones as well with mounting evidence of deeper troubles. Waterhouse dispatched a Facebook message at the end of the work day last Friday, August 19th, throwing in the towel. She wrote: “So, managing the mall, keeping up with my kids, and getting ready for fall dance classes (she owns and operates the Fusion Center for Dance in the mall), plus, of course, sleep proved to be too much. I have resigned my post at the mall in order to concentrate on family and Fusion. Proud of what was accomplished, but so much more to go. Cross your fingers for the next mall manager.”
I caught up with Christine earlier this week, and clearly her plate was far beyond filled to capacity, however, she was clearly defeated. The upbeat, feisty demeanor she exhibited when I first told you at the end of June of her moxie in taking on mall owner Mike Kohan was sapped. She made it pretty clear that the deep divide in business philosophy between her and Kohan was perhaps too large a gulf to bridge.
She does have three children heading back to school and the Fusion Center for Dance is soaring, so it has never been an easy task. However, there are indications that the landscaping work that had been undertaken earlier this summer remains unpaid. While potholes were patched, little else in exterior work on the mall was being taken care of, despite pledges by Kohan to bring the mall up to higher standards.
While the interior was cleaner than in a long time, other critical issues were not being cared for. A separate out-lot near the Napier Avenue entrance was placed in default for an unpaid tax bill of $458 despite repeated attempts to communicate the need to save the property from foreclosure.
Berrien County Treasurer Bret Witkowski confirmed this afternoon that Kohan is delinquent on substantial property tax bills for the entire mall including half of the tax bill for 2014 and the entire tax bill for 2015. With the unpaid portion of 2014 at more than $80,000, that would appear to put him well over $160,000 in debt to the county on tax issues alone.
Other vendors have complained about not being paid for work performed at the mall, and occupancy is at an all time low with two dozen tenants, 14 of which are retailers, still open in the more than 625,000 square foot center. The Orchards Mall was built 37 years ago in 1979, and Kohan’s Retail Investment Group out of Great Neck, New York purchased it two years ago with thus far unfilled promises to not only stabilize it, but add to the retail line up going forward.
Waterhouse had called him out on his lack of performance and total indifference to the deteriorating environment at the facility. His response was to hire her as on-site property manager, a role she accepted contingent upon his delivery on promises made. Her interest was more than just altruistic, inasmuch as she, too, is a tenant leasing 8,000 square feet for her Fusion dance center. She wanted to protect the investment made in the center and was pleased with early indications that Kohan would, in fact, “get off the dime, and do something to improve the center.”
Kohan has made a practice of buying aging, under-performing malls, retaining national retail anchors, luring small and medium-sized tenants, and filling large vacancies by leasing space for social gatherings, such as festivals, fund-raising events and concerts.
While Kohan has enjoyed the occasional successful venture, Google searches often turn up the dark side of his dealings in places with mixed results or outright failures. He has been quoted as essentially shrugging off the failures saying, “That’s the nature of buying distressed malls. It’s a very, very challenging situation for you to bring another anchor, which is close to impossible,” but he tries.
A property he owned in Minnesota ran afoul of authorities in 2014 when his mall “fell into a state of disrepair serious enough that city officials sought a court order to demolish parts of the structure,” according to the Daily Gazette of Schenectady, New York.
Struggles in Aberdeen, Washington and Effingham, Illinois were acknowledged by Kohan to reporters as a case of investments that “don’t always go as planned,” and that he “sometimes buys into properties that are beyond saving,” even while standing by his ability to revitalize distressed properties, even if a few don’t pan out. In fact he told reporters at one point, “Nothing is 100-percent in this world. When you invest in so many properties, obviously you’re going to have one or two that can’t be helped.”
Kohan purchased the Orchards Mall in December of 2014 from Sequoia Investments of Eureka, California for an undisclosed price. At the time of his purchase, the Benton Township property marked the 14th center in his investment portfolio. The 60-acre mall site in Benton Charter Township still maintains two major anchors in the form of J.C. Penney and Carson’s.
One of Kohan’s property managers from a facility in Indiana will help manage the local team until a replacement for Waterhouse can be hired. Stay tuned.
