(This story was updated April 11 at 4 p.m. with details on a permit appeal.)
[B]URLINGTON — The company behind a planned $225 million redevelopment of the Town Center Mall in downtown announced Tuesday that he has landed a major investor.
Town Center owner Don Sinex said his company, Devonwood Investors LCC, has reached a joint venture agreement with Rouse Properties. The New York firm will be the sole equity investor in the redevelopment.
Rouse Properties is a private real estate investment trust that owns 34 malls in 19 states. It’s a subsidiary of Brookfield Asset Management, a global firm managing $200 billion in assets.
The agreement is expected to close in “the coming weeks,” and construction on the massive downtown project is expected to begin shortly after, according to a joint news release from Sinex and Rouse Properties. The project is expected to take three years to complete.
Sinex said in an interview Tuesday that the value of the Rouse Properties investment is confidential, but he did say that “it’s a very substantial number.”
The developer said previously that he would seek $50 million to $75 million in equity investments. That in turn will help him secure a construction loan of roughly $150 million to fully finance the project. Devonwood Investors also has its own money in the project, Sinex said.
Finding an equity investor was a necessary first step in persuading a bank to make such a large construction loan, Sinex said. He’s in talks with five banks. The eventual lender will hold a mortgage backed by the property, improvements and other project assets such as tenant leases and municipal permits, Sinex said.
Rouse Properties is an ideal equity partner for the Town Center mixed-use redevelopment, which is designed to revitalize a failing mall, Sinex said.
“They own a bunch of traditional malls, so they get it,” he said. “They see what’s happening in their portfolio. Retail is struggling. There’s no growth in retail, so they’re looking, as developers, for portfolios and real estate products that are relevant. What’s relevant is mixed-use projects where retail is just one of the components. That’s what’s going to bring them into the future.”
Brian L. Harper, Rouse Properties CEO, said in a statement: “We agree strongly that Devonwood has the right plan to revitalize this outdated mall and are confident that this redevelopment will be an economic and retail boon for the Burlington community.”
The Town Center project cleared the final zoning hurdle when it received approvals from the Development Review Board last month, but a group of residents opposing the project said they planned to challenge that approval in Environmental Court.
Their attorney, John Franco, said the deadline to bring the appeal is Monday. After that, he plans to file a motion asking the judge for a stay that would block demolition and other construction-related activities until the appeal is resolved.
The project is slated to include 130,000 square feet of retail, 230,000 square feet of office space, 272 apartments, a preschool and an above-ground parking garage with 761 spaces in what would become Vermont’s tallest structure.
The building will have three towers in a one-block area from Pine to St. Paul streets and Cherry to Bank streets and would reach 14 stories — a height allowed by new zoning city voters approved in November.
As part of a preliminary agreement with the city, Sinex will reconnect Pine and St. Paul streets through his property and sell the new roadways back to Burlington.
Sinex is to be reimbursed for the new roadways and other public improvements through a $22 million tax increment finance bond the city will take out. Franco and city residents are also challenging the legitimacy of the bond vote in court.
