McWhinney Real Estate of Loveland has signed an agreement to buy the financially troubled Foothills mall in Midtown Fort Collins, according to documents filed in Larimer County District Court.
No sales price was disclosed, and the court still needs to sign off on the purchase. McWhinney is now going through its “due diligence” period to understand all the facts and circumstances that may affect the value of the property.
It could take months for McWhinney to finish its due diligence and close the deal, said McWhinney President Ray Pittman. But it is reasonable to expect the sale could go through in the last half of the year.
It is unclear whether the agreement forestalls the April 21 foreclosure sale scheduled after the mall property was put into receivership when its owners failed to make an Oct. 9 debt payment.
Pittman said McWhinney’s legal team is working with the receiver’s legal team to hash out those details.
Although it’s early in the process, Pittman said plans for the property would likely focus on a concept called placemaking and involve retail, restaurants and multifamily housing to build on the success McWhinney has found with Cycle, the 400-plus apartments McWhinney built adjacent to Foothills.
“Foothills is not quite the place people want to be in 2021 and going forward,” he said. “I think Foothills mall got a little tired and it’s struggled.”
Pittman said the company would probably look at some kind of “redensification” strategy. That could involve razing some existing structures or increasing parking capacity in some areas and building multifamily housing on existing parking spots, he said.
“Some element of retail is absolutely still viable,” Pittman said, but McWhinney will spend the next few months looking at what’s possible, what the community and neighborhood want and understanding local demand.
“Retail is under pressure everywhere; it doesn’t scare us off to know the mall has struggled,” he said. There’s work that can be done that can help revitalize the project and the neighborhood.”
The sale would bring Foothills under the ownership of a local company with intimate knowledge of the Fort Collins market and deep connections to major retailers.
McWhinney developed Centerra, the Promenade Shops at Centerra and countless retail, hotel and housing projects in Loveland, Fort Collins and Denver. It revitalized Union Station in Denver.
Revitalizing Foothills “feels like a hometown project for us,” Pittman said. The company plans to build on Foothills’ name recognition and location and focus on local, unique and authentic experiential retail. “We want to create an experience you can’t get anywhere else. That’s key for us. Placemaking … it’s more art than science.”
The purchase-and-sale agreement is good news for the city, but McWhinney still has much work to do during its due-diligence phase, said Economic Health Director Josh Birks.
“I don’t want to get overly excited,” he said, cautioning that deals like this can take months to finalize. “It could be a while before we know if they plan to go forward.”
McWhinney has a demonstrated commitment to Northern Colorado and will be a good partner to work with, Birks said. “They will have a strong interest in working on the project and making some things happen,” he said.
Fort Collins City Manager Darin Atteberry said he anticipates engaging more directly with the McWhinney team to support it during its due-diligence phase.
“We are excited to hear that the sale of the Foothills property is moving forward and that a well-known and proven Northern Colorado partner will likely be the future owner,” Atteberry said. “Our hope for the property remains unchanged — that it will become a community gathering place in Midtown and continue to catalyze the redevelopment and reinvestment in the corridor.”
How Foothills got to this point
In a lawsuit filed Dec. 10 in Larimer County District Court, MUFG Union Bank N.A. said mall owner Walton Foothills Holdings VI — a holding company owned by mall developers Walton Street Capital and Alberta Development Partners — still owed $46.59 million on the original $145 million loan as of Dec. 1.
Walton agreed to place the property in receivership with Cordes & Co LLP of Greenwood Village, according to the lawsuit.
In earlier court documents, the lender said if a receiver were not appointed before the foreclosure, set for April 21, “the value of the property in both the short and long term will be severely diminished, and the lenders will suffer immediate and irreparable harm. There is a danger of waste, destruction or deterioration to the property if a receiver is not appointed.”
Alberta purchased the beleaguered Foothills Mall in 2012 from General Growth Properties and put $313 million into bulldozing and rebuilding most of the site. It retained a portion of the enclosed mall and created a property intended to be a community gathering spot with a Cinemark movie theater and a west lawn suited to summertime concerts and winter skating.
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Alberta promised a high-end shopping center with brands that would draw shoppers from southern Wyoming and western Nebraska to Northern Colorado.
But the remodeled mall and surrounding shopping center, which includes just more than 60 shops, restaurants and the theater, has underperformed since it opened six years ago and struggled even further as changes in shopping habits accelerated during the COVID-19 pandemic.
As part of the mall’s redevelopment, the city of Fort Collins put together a $53 million financing agreement for the mall, including construction of the city-owned Foothills Activity Center that replaced the former Youth Activity Center on mall property.
The agreement funded about $72 million in metro district debt and created about $53 million in public benefits, including the FAC and a pedestrian underpass linking the east and west sides of College Avenue.
The four primary funding sources for improvements made to the property came from the additional property taxes generated by the metro district, a public improvement fee charged on mall sales and incremental gains to sales and property taxes generated at Foothills.
Birks does not anticipate there will be any changes to the financing agreement with a new owner, but there’s nothing to stop McWhinney from asking for more financial incentives.
“Anything’s possible,” Birks said, but any future city concessions would depend on what McWhinney’s plans are for the property. “I don’t think minor changes will warrant any kind of additional partnership, but not knowing their plans I don’t know what our response would be if the question were asked.”
The financing agreement is not likely to change either, he said.
Money that went in to the metro district for certain improvements have already been spent and the improvements made, Birks said. “There’s not any real conditions that I foresee that would result in a substantial change” in the agreement.
By now the city estimated the renovated mall property would be full of stores and shoppers generating more than $9 million in annual sales tax revenue.
In 2018, Foothills collected less than $4 million in sales tax revenue on $99.1 million in taxable sales; in 2019, it collected $3.87 million; and through November 2020, it had collected $2.6 million.
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Sales tax collected from Foothills
2016: $3.1 million
2017: $3.6 million
2018: $3.8 million
2019: $3.9 million
2020 (through November): $2.6 million
Address: 215 Foothills Parkway, Fort Collins
Retail space: 620,000 square feet
Mall interior retail space: 158,902 square feet
Anchors: Macy’s; Dick’s Sporting Goods
Residential component: 402 apartments developed by McWhinney Inc. of Loveland
Entertainment: Foothills Activity Center, Cinemark, green space that includes summertime concerts and winter ice skating
Percent leased: About 70%
Redevelopment cost: $313 million
Foothills mall timeline
- September 1972: Everwest, a partnership between Everitt Enterprises of Fort Collins and Westcor, a Phoenix development company, breaks ground on new regional shopping mall.
- August 1973: The 80,000-square-foot Sears becomes the largest retail store in the city.
- Nov. 1, 1973: The 336,000-square-foot Foothills Fashion Mall opens with anchors Sears, The Denver and May D&F.
- 1980: JCPenney builds a 62,000-square-foot expansion.
- 1989: Foothills grows from 450,000 square feet with 60 to 65 stores and one hallway to 600,000 square feet, 120 stores and multiple hallways as part of a $40 million redevelopment plan that adds Mervyns to the south side.
- January 1993: May department stores merge with Foley’s and rename all 11 Colorado stores.
- September 2002: Bricks from the mall’s west entrance slide from the roof, one of the first signs the mall is aging.
- December 2003: Mall is sold to General Growth Partners, which promises major renovation. Gart Sports announces September 2005 closure. California-based Mervyns announces it will close all but one of its 11 Colorado stores by the end of January, including its Foothills location.
- September 2006: JCPenney moves to a freestanding store on South College Avenue, the former Shopko building.
- May 2007: City Council approves tax incentives for Foothills redevelopment.
- November 2008: City Council pulls the plug on mall tax incentives, citing lack of development progress.
- April 2009: GGP files for Chapter 11 bankruptcy.
- March 2010: City unveils a draft of a consultant’s report on redevelopment of Midtown Corridor, including Foothills Mall, at a public meeting.
- November 2010: GGP emerges from bankruptcy and renews talks with Fort Collins city officials about redevelopment.
- December 2010: The vacant JCPenney store at the mall is razed. City unveils preliminary timetable for redevelopment and plans to bring Dillard’s to the mall.
- June 2011: Demolition starts on the former Perkins restaurant on College Avenue in front of the mall to clear the way for Corner Bakery. The property is owned by GGP.
- December 2011: The Corner Bakery opens Dec. 19.
- February 2012: GGP officials visit Fort Collins for talks with city. Mall applies for building permit from city of Fort Collins to erect three partitions in preparation for decommissioning the mall’s back hallway.
- July 2012: General Growth Properties sells mall to Alberta Development Partners LLC.
- November 2013: Tres Margaritas shuts down to clear the way for the first phase of Foothills redevelopment.
- January 2014: City approves $53 million financing agreement with mall developers. Mall developers agree to deed back the Foothills Activity Center and build an underpass beneath College Avenue.
- 2014: The Corner Bakery closes and is razed just three years after opening in a new building.
- October 2014: Sears closes its anchor at the mall after months of negotiations with Alberta. It reopened months later with a 10,000-square-foot appliance-only store.
- October 2015: Nordstrom Rack, H&M and Cinemark Movie Bistro and XD open.
- November 2015: Foothills mall holds its inaugural holiday kickoff with big crowds.
- March 2016: The city-owned Foothills Activity Center in the enclosed mall opens.
- Summer/fall 2018: Dick’s Sporting Goods and Loft Next Door open inside the mall. Dick’s fills junior anchor position after Sports Authority filed for bankruptcy and closed all of its stores.
- December 2020: Developers miss key payment; court puts property into receivership. Foreclosure proceedings begin.
- February 2021: McWhinney signs a purchase-and-sale agreement with the property’s receivers.
Pat Ferrier is a senior reporter covering business, health care and growth issues in Northern Colorado. Contact her at [email protected]. Please support her work and that of other Coloradoan journalists by purchasing a subscription today.