Cedar Realty Trust wants to transform its aging Riverview Plaza strip mall in South Philadelphia into a waterfront row of luxury apartments, trendy shops, and lively restaurants, anchored by the center’s soon-to-be-reborn movie theater.
The real estate investment trust, based in Port Washington, N.Y., plans to begin work this year on its first phases of redevelopment at the shopping center, which spans the western side of South Columbus Boulevard, from Washington Avenue to Dickinson Street, in the city’s Pennsport neighborhood.
The proposal follows Cedar’s earlier-disclosed plans to revamp its similarly dated retail properties on the west side of South Philadelphia — Quartermaster Plaza and South Philadelphia Shopping Center — into a single one million-square-foot shopping and residential complex it is calling South Quarter Crossing.
Cedar and other shopping center landlords are increasingly rejiggering their properties to include housing in an effort to enliven their centers with round-the-clock activity in an age of retail bankruptcies and shrinking chain-store footprints.
“This mixed-use project made up of apartments sitting over street retail will feature some of the finest river views in all of Philadelphia," Cedar president and chief executive Bruce J. Schanzer said of the Riverview Plaza redevelopment in a conference call late last year with analysts. “Although we are just starting to discuss it publicly now, we currently anticipate launching this project in the first half of 2019.”
Riverview Plaza was among the South Columbus Boulevard retail centers built in the 1980s by developer Bart Blatstein, who helped transform the area from an enclave of disused industrial buildings into a big-box shopping district. Cedar acquired the center in 2003.
The real estate trust plans to redevelop the center over seven to 10 years in three phases, the first two of which will consist of about 260 apartments and 125,000 square feet of retail, Cedar’s chief operating officer, Robin McBride Zeigler, said during the call.
The updates are set to begin with a $12 million renovation of the UA Riverview Plaza movie theater by owner Regal Cinemas, according to a leasing brochure previously posted to the company’s website that has has since been removed.
The theater improvements will include the introduction of luxury seating and “4D” presentations, which feature physical effects — such as water sprays, seat vibrations and strobe lighting — that occur in synchronization with film scenes, according to the brochure.
Plans also call for reconfiguring Riverview Plaza’s layout so its buildings no longer face South Columbus Boulevard across parking lots, but instead open directly onto the sidewalk, with the center’s parking spaces tucked behind the structures, away from the street. Many of the new buildings are planned as multistory apartment structures with ground-floor retail.
“We anticipate the merchandising to be entertainment and restaurant focused, enhanced food service, and other small shop retailers,” Zeigler said.
The plans appear to involve preserving the historic Engine 46 Firehouse building at Reed and Second Streets, which can be seen in brochure renderings. Cedar previously obtained a demolition permit for the 124-year-old brick, castle-like building, but it was subsequently placed on the city’s Register of Historic Places.
Cedar spokesman Kyle Kirkpatrick declined to share details about the company’s plans. Regal did not respond to phone messages seeking details about the theater upgrades.
Schanzer told analysts that his discussion of the redevelopment plans was tied to Cedar’s acquisition of a “strategically significant parcel that is adjacent to the property": the former Pennsylvania Railroad warehouse property just south of Washington Avenue between Riverfront Plaza’s northern tip and an elevated portion of I-95.
Developer Blatstein retained ownership of that property when Cedar bought the retail center. In 2011, he pursued an ill-fated plan to mount giant advertising signs on the blighted, four-story industrial building that would be visible to drivers on the highway.
Cedar bought the warehouse property for $1 million in August, paying Blatstein all but $25,000 of the purchase price with “operating partnership units” that can be converted to company stock, according to records filed with the city.
Property sellers who accept operating partnership units in deals with real estate investment trusts such as Cedar can put off paying taxes on the land’s gain in value, in some cases indefinitely, while still receiving dividend payments from the companies. But such sellers bear the risk of potentially seeing those units lose value if the trust’s stock price declines.
Cedar shares closed at $3.10 on Thursday in New York, down 32 percent from $4.57 when the property was sold Aug. 8. Over that time, the FTSE NAREIT Equity Shopping Center Index, which tracks the performance of Cedar and 18 other strip mall real estate trusts, fell just 13 percent.
The payment in partnership units also resulted in a higher real-estate transfer tax payment than if it had been a cash transaction, according to calculations by the Inquirer.
Blatstein said he opted for the units because he believes “strongly in the future of Cedar Realty Trust."