Lake & Nicollet Redevelopment (Kmart site)

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FISHMANPET
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Re: Lake & Nicollet Redevelopment (Kmart site)

Postby FISHMANPET » June 22nd, 2017, 8:43 pm

Making them whole requires building them a new store and giving them the same lease deal, I believe. That's what "make whole" means.

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Re: Lake & Nicollet Redevelopment (Kmart site)

Postby TroyGBiv » June 23rd, 2017, 1:06 am

The street car plans would be the one way to tear down Kmart... transit is the one thing that allows for claiming land and tearing down Kmart as I understand it... I feel like I read that and it is discussed way way back in this post...

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Re: Lake & Nicollet Redevelopment (Kmart site)

Postby MNdible » June 23rd, 2017, 8:57 am

The city could use eminent domain whether its for the street or for the transit. The issue is that, in either case, it's going to cost you a huge pile of cash (and probably years in court) to make Kmart whole for the loss of the value of their ridiculous lease.

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Re: Lake & Nicollet Redevelopment (Kmart site)

Postby joe.minneapolis » August 28th, 2018, 12:09 pm

It would be great if the KMART on east lake street was purchased by a Real Estate redevelopment fund like the one described in this article. Wishful thinking?

https://www.bizjournals.com/twincities/ ... a-new.html

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Re: Lake & Nicollet Redevelopment (Kmart site)

Postby VacantLuxuries » August 28th, 2018, 12:50 pm

It's a pain in the short term that we're stuck with the Kmart, but I think we're better off in the long term to not have the property owned by Lampert's hedge fund.

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Re: Lake & Nicollet Redevelopment (Kmart site)

Postby zlkahn » October 12th, 2018, 10:13 am

Will be interesting how news of an impending Sears bankruptcy filing will impact this site: https://www.cnbc.com/2018/10/12/sears-n ... stmas.html

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Re: Lake & Nicollet Redevelopment (Kmart site)

Postby twincitizen » October 12th, 2018, 11:49 am

I think this could be among the last stores to close in the midwest, if not the entire country, since Kmart doesn’t own the land (nothing to sell) and has that sweetheart lease deal (making it feasible to continue turning a profit in the interim). The exception to that statement is if Kmart goes full Chapter 7 bankruptcy (liquidation)

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Re: Lake & Nicollet Redevelopment (Kmart site)

Postby Blaisdell Greenway » October 15th, 2018, 2:50 pm

Even then (Chapter 7), whoever picks up the leaseholdings as part of the liquidation would then own the Minneapolis lease. The city would have to still negotiate a buyout with whoever that was.

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Re: Lake & Nicollet Redevelopment (Kmart site)

Postby VacantLuxuries » October 16th, 2018, 8:08 am

If I was a Minneapolis city councilperson who wanted this over once and for all, I'd take a field trip to the Kmart with a building inspector and find some change that could be made to city code. Something that wouldn't be difficult for a new construction building or renovation project to meet, and that current buildings would be grandfathered in on. But just onerous enough that it would prevent someone from inheriting a big box store that's rotted for ten years under a CEO that refused to invest in his stores and just opening up shop.

The new leaseholder would be welcome to continue to lease the cheap land. Provided of course that they don't intend to operate a business in the old building.

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Re: Lake & Nicollet Redevelopment (Kmart site)

Postby minntransplant » October 16th, 2018, 9:13 am

The lease is a bigger disaster than I thought ... it seems there isn't language that bankruptcy/financial insolvency is considered default and/or a basis to break the lease. I'm not sure you can just pick up the lease in liquidation. I think Sears/Kmart would need to sublet or assign the lease. A landlord can usually refuse that.

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Re: Lake & Nicollet Redevelopment (Kmart site)

Postby rynet91 » October 27th, 2018, 10:13 am

minntransplant wrote:
October 16th, 2018, 9:13 am
The lease is a bigger disaster than I thought ... it seems there isn't language that bankruptcy/financial insolvency is considered default and/or a basis to break the lease. I'm not sure you can just pick up the lease in liquidation. I think Sears/Kmart would need to sublet or assign the lease. A landlord can usually refuse that.
I am under the impression that this lease and a few others similar to it which Kmart/Sears holds are some of their greatest assets. Throughout bankruptcy, if they are able to make it through without giving up the leases more than likely their status with the lease will never change. I believe they can sublet without approval from the city, however obtaining building permits for redevelopment of the space could prove difficult as the city is the landlord and the approver of the permits.

If a judge forces them to give up the leases as part of their bankruptcy, the lender that acquires the Mpls lease would more than likely accept a one time buy out option from the city to get paid fast. This is an option the city would consider as this fast-tracks their Nicollet Ave redevelopment plans and is considered significantly cheaper than accepting Kmart's current offer (build new building and renew lease through date at current price).

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Re: Lake & Nicollet Redevelopment (Kmart site)

Postby twincitizen » October 31st, 2018, 10:44 pm

We’ve often seen it stated in the press that “Kmart has a lease through 2053”, but a recent article phrased it a bit differently, as “lease renewal options through 2053”. Minor change in wording, major change in the assumptions many of us have been making. If the store went under, it’s pretty unlikely they’d pick up the next renewal option. The previous property owner was always super tight-lipped about the lease terms, but now that the city is the underlying property owner, you’d think we could get a little more clarity, like when does the current lease term end, how long are the renewal options, etc.?

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Re: Lake & Nicollet Redevelopment (Kmart site)

Postby thom » November 1st, 2018, 7:58 am

If the City is the lessor, why couldn't somebody just do a FOIA request and get a copy of the lease?

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Re: Lake & Nicollet Redevelopment (Kmart site)

Postby VacantLuxuries » November 1st, 2018, 8:27 am

It's worth a try.

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Re: Lake & Nicollet Redevelopment (Kmart site)

Postby MNdible » November 1st, 2018, 9:54 am

That really seems like a semantic difference, no?

The important question is whether KMart can sublease without landlord approval under the original terms of the lease.

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VacantLuxuries
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Re: Lake & Nicollet Redevelopment (Kmart site)

Postby VacantLuxuries » November 1st, 2018, 10:01 am

Or if there's a business that would be willing to lease at market rate.

That's the Sears/Kmart/Seritage/Lampert MO - pay a penny for an old lease they got for a steal from malls/property owners scared their anchor might leave, and then turn around and sublease for market rates to someone else. Sears/Kmart leases are basically parasitic at this point.

The only problem being that there's no way Minneapolis would approve any site improvements that don't reopen the street, and there's zero chance a building left to rot for 10 years while Lampert played stock games is going to fetch anywhere near market rate.

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Re: Lake & Nicollet Redevelopment (Kmart site)

Postby TroyGBiv » November 1st, 2018, 5:51 pm

years ago the discussion here was about how the one way to break the lease and break the lot back into two blocks without the participation of Kmart/Seritage was using a transit related law that allows the city/county/state to take right of way... Does anyone else remember that? I looked back many pages here but couldn't find it... I always thought that that was an underlying motive to the Nicollet Street Car idea...

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Re: Lake & Nicollet Redevelopment (Kmart site)

Postby BigIdeasGuy » November 1st, 2018, 7:45 pm

MNdible wrote:
November 1st, 2018, 9:54 am
That really seems like a semantic difference, no?

The important question is whether KMart can sublease without landlord approval under the original terms of the lease.
If a lease holder no longer exists how could sublease in the first place?

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Re: Lake & Nicollet Redevelopment (Kmart site)

Postby MNdible » November 2nd, 2018, 9:22 am

A below market lease is (at least potentially, depending on the lease terms) an asset that could be sold as part of a liquidation.

Regarding an eminent domain taking, even though the city already owns the land, they would still have to reimburse Kmart for the lost value of the lease. So, at this point, not much different than negotiating terms to break the lease.

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Re: Lake & Nicollet Redevelopment (Kmart site)

Postby FISHMANPET » November 2nd, 2018, 9:28 am

To use eminent domain you have to make the original landowner "whole" again which in this case entails buildings a new Kmart building and giving Kmart the same sweetheart lease as they have now, which I'm sure would be insanely expensive.
E: Like I said a year and a half ago
FISHMANPET wrote:
June 22nd, 2017, 8:43 pm
Making them whole requires building them a new store and giving them the same lease deal, I believe. That's what "make whole" means.
And isn't the lease currently owned by not K-mart? Lampert has already sucked the lease deal into his hedge fund? Or he just owns the debt and would get a first shot at the lease deal in a liquidation?


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