Gaithersburg’s Lakeforest Mall could soon be sold to a developer that has worked to turn around another struggling mall in Montgomery County.
Tom Lonergan, Gaithersburg’s director of economic development, told Bethesda Beat on Friday that “it’s our understanding” that Annapolis-based Petrie Richardson Ventures has the mall under contract, although the deal hasn’t closed. The company is behind the recent renovation of Ellsworth Place in downtown Silver Spring.
Lonergan said Walt Petrie, chairman of Petrie Richardson, has met with city officials to discuss the mall property.
A spokesperson for Petrie Richardson Ventures declined to comment on whether the company is buying the mall when reached by email Friday.
The subscription-only commercial real estate newsletter, Montgomery Newsletter, first reported news of the pending sale in its Feb. 5 edition.
Over the past five years, Petrie Richardson Ventures rebranded and renovated the former City Place Mall in downtown Silver Spring as Ellsworth Place. The estimated $45 million facelift included adding new tenants such as Dave & Buster’s, T.J. Maxx, Michaels and the restaurant Not Your Average Joe’s.
U.S. Bank owns the Lakeforest Mall, according Maryland property records. It purchased the property in a foreclosure auction for about $19.1 million in a deal that closed last month. That was the amount Five Mile Capital, the previous mall’s owner, owed on the loan it had with the bank.
Five Mile previously purchased the mall for $102.5 million in 2012, but stopped paying back the loan in early 2017, according to The Washington Business Journal. The bank is working with C-III Asset Management, a special servicer, to sell the property.
If Petrie buys the property, it would be purchasing the main mall building, which houses about 160 stores, but not the nearby department store buildings. Those are owned by the department stores—Sears, JCPenney, Macy’s and Lord & Taylor. A developer planning a large redevelopment at the mall site could potentially buy those properties from the department stores if the stores are willing to sell.
Local officials said after the 2017 foreclosure that the mall property, which is about 30 acres, would be a prime opportunity for a mixed-use redevelopment project. The mall was built in 1978.
“The city is interested in working with any property owner that ultimately gains control of the property,” Lonergan said.