While the Battle of Briardwood 1 rages in Jackson Municipal Court as the city of Jackson fights an out-of state company that purchased a property and proceeded to let it fall apart. Unfortunately, the Kohan affliction plagues other cities besides Jackson. The Real Deal Real Estate News reported in February 2021 that Mike Kohan and his company Kohan Retail Investment Group follows a similar pattern. It buys distressed properties and then neglects them, causing severe heartburn for cities and counties. Real Deal reported:
Kohan has amassed a portfolio of 52 malls and two hotels, according to its website, and has picked up 15 other properties in the past year alone, according to its founder. Many of its properties are plagued by power outages, vacancies and overall neglect. Some are on the brink of foreclosure. ... The vacancy rate for U.S. regional malls reached an all-time high of 11.4 percent in the first quarter of 2021, and three major shopping-center landlords — Washington Prime Group, CBL & Associates and Pennsylvania Real Estate Investment Trust — have been pushed into Chapter 11 bankruptcy during the pandemic. That doesn’t seem to stop Kohan. The mall investor has spent the past two years scooping up properties across the country, often for fractions of their previous purchase prices. The Montgomery Mall in the Philadelphia suburbs, which in 2014 was valued at $195 million, was picked up out of foreclosure by Kohan last year for $55 million. The mall was previously owned by Simon Property Group. Last year, Kohan also paid just $33.25 million for the Triangle Town Center in Raleigh, North Carolina, down from the $174 million the property fetched in 2016. “In general, nobody wants these poor little pieces of the property these guys are buying,” retail consultant Jan Kniffen said. Often, Kohan is the last owner a mall sees. “I often compare it to the role of a junkyard in the automobile’s life,” said Nick Egelanian, president of the retail real estate consulting firm SiteWorks. “The glamorous part of the automobile’s life is when you buy at a new car dealership. But eventually it gets sold at a used car dealership. And then somewhere later in its life, it gets sold for its parts.” Mike Kohan didn’t quite refute that comparison. Kenner has had quite an ordeal with Mr. Kohan. Remember the Esplanade Mall?
As the lawn at the Esplanade Mall went wild, the mayor stepped in. “Unkempt property is going to draw rodents and things that are worse, and we don’t need that,” Ben Zahn, the mayor of Kenner, Louisiana, told local news at the time. “If the mall can’t take care of themselves, we have to step in and take care of it for them.” The city hired a landscaping company to manicure the premises. Eventually, it wasn’t just grass that was the problem. The property was put up for auction in a sheriff’s sale after Kohan failed to pay more than $300,000 in taxes in 2019. There were no bids, so the tax sale title was transferred to the local parish government. Kohan still operates the mall and has two more years to pay taxes and other penalties to reclaim the property. In the meantime, the city will continue maintaining the greenery. It’s not the first time Kohan has run into local trouble with its properties. The city of Vero Beach, Florida, threatened to shut off power at the Indian River Mall in 2017 after Kohan allegedly failed to pay its electric bills for three months.. In 2013, after Kohan failed to repair a crumbling roof, exposed electrical wiring and a dismantled fire sprinkler system, officials in Matteson, Illinois, called the Lincoln Mall a “public danger” and ordered it closed. Kohan had bought the property out of foreclosure a year earlier for $150,000 with the understanding that it would assume responsibility for $9 million in fines and unpaid taxes accumulated by its previous owners. The mall was demolished in 2017 after sitting abandoned for years. ... Kohan failed to avoid a similar situation at the Rotterdam Square Mall in New York, which suddenly went dark in 2015 after $300,000 was owed on an electric meter Kohan said it wasn’t aware existed. In Lanesborough, Massachusetts, the Berkshire Mall was temporarily closed at least four times in 2018 and 2019 after losing power. Mike Kohan blamed “an issue with the electric meter.”
Read the rest of the article. Jackson Municipal Court Judge Jeff Reynolds issued an arrest warrant for Kohan last year after he failed to comply with a demolition order. Kohan's lawyer told the Court there was a buyer. However, the buyer has yet to obtain financing and Judge Reynolds' patience has worn thin. He said he will issue another arrest warrant for Mr. Kohan if the building is not torn down within 60 days.
25 comments:
Okay. I give up. So why does the company buy these properties at discount prices and then do nothing with them?
I'd be interested to know what this guy's angle is.
What is the business model here? why spend millions on dilapidated properties?
So what is the investing(profit) angle on buying dilapidated defunct properties? Tax advantages? Insurance claims(fraud)? I don't see how this makes good financial sense.
Can you say shell companies seeking tax write offs while risking no personal liability-
I think he has a dilapidated mall fetish-
I think the real question who is funding the guy and why? It may be part of the taking down of America from the inside that we are seeing evidence of everyday.
Nobody in their right mind would operate like this unless they were fronting a tax loss scheme for billionaires.
Interesting nugget from a recent WSJ article about "zombie malls":
Namdar and Nassim got into the mall business as it started going downhill. They are part of a small group, including Kohan Retail Investment Group, who turn their sights on squeezing profits out of dying malls.
How can you claim a tax loss on a property that was worthless in the first place. He may have a fetish for homeless people, roaches and fires started on concrete floors.
2:27 same goes for developers that build commercial buildings going up with few occupants. The economy will get crushed when the low commercial property occupancy numbers hits the news. Knock-knock? Anyone out there?
Didn't think I saw the name, but you can understand the business model here:
https://www.wsj.com/real-estate/commercial/malls-real-estate-shopping-24c3d7fd?mod=RSSMSN
2:08 left the tinfoil hat at home today
I'm still baffled at how the individual can be held criminally responsible when a corporation owns the property. Can a real lawyer explain this?
"I'm still baffled at how the individual can be held criminally responsible when a corporation owns the property. Can a real lawyer explain this?"
A trial court judge can find as a fact that "Mickey is a duck and Donald is a mouse" and until a Court above reverses, it stands as a "fact." But more directly related here, a corporate entity/"veil" can be "pierced" in cases where a legal entity with one or few shareholders/members is being used merely as an alter ego by that one/those few to engage in improper conduct. In very simple terms, one cannot set up a corporation to do improper things and then disavow all liability for what is in fact their own conduct if and when that conduct comes under legal challenge.
9:35, I share Bill Dees curiosity. Piercing the veil is a civil matter. Is the underlying case civil or criminal? I thought it was criminal but I frankly don’t know. Would seem to require a step between citation and contempt/incarceration.
FOLKS Kohan is as dumb as a fox...He's not buying these properties for the damn buildings. 100 million CASH for dilapidated structures? Come on...The masterful method is how he dances with local authorities and so far is batting .800 if you pry his portfolio open. In most cases he's getting someone to foot the bill for the levelling of the structures and everyone leaves the table saying "we showed him we were serious." And he's laughing all the way Munilla Construction Corp. Bet.
Probably, Bill Dees, more understandably than the hoo-doo @ 9:35...the same way one can sue a Board and Its officers, individually...and, as a result, both the Board and its officers can be found guilty and sentenced.
So, 1:38 a.m. - He buys the building for 500,000 then pays somebody 120,000 to level it. Then he sells the property for 350,000. And he laughs all the way to....where?
Good info, Kingfish. I, too, wonder where he's getting his money. This process makes no sense.
My guess is NY Real Estate shell company buys building, then uses photos and portfolio from its hayday creating inflated valuation to grease/leverage other deals, like pyramid scam.
Notice how attractive this Briarwood One photo is that jj and other media use.
8:53 is on the right trail. It’s an asset/banking scam. He probably has little real liquidity in cash flow but uses these for a combination of tax write offs, insurance claims but most importantly asset leverage for the next big loan purchase from the next big dumb international bank. He’s got into a bind on payments and has to buy more to get more $. Just all around high level piece of shit grease ball scammer.
Also, when is that top golf gonna open? Should be soon since they were ready to break ground a few months back right?
G.
@9:48 where are all of the other big investments that are supposed to be coming to Jackson.... let's see....The big development in South Jackson (sports complex - NEVER gonna happen)... Housing development on Briarwood where the old Mcrae's used to be. (Never going to happen) All just fantasy. I could go on .....
1:11 They are buying land. It's a long term investment.
My grandfather had a large lot of land that was , at his death, surrounded by a decaying area. As the city it was in ran out of space, the area was "gentrified" including old malls. The malls were turned into condos ( think The District type set up with stores and parking on the lower floors),
Do some of you ever actually leave Mississippi or do more than just do tourist traps outtings when you do?
Not sure what your granddaddy owning land or somebody ever leaving Mississippi has to do with an absentee landlord going to jail, but...whatever.
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