Harrison Township, PA – Kathy Anderson of Progress Capital Advisors worked with Steve Kogut to arrange a $16.4M CMBS fixed rate loan when he acquired Heights Plaza in 2003. The plaza was built in 1953 and became a popular destination for shoppers and families throughout the Alle-Kiski Valley. At the time of the loan, Lazarus, Sears, Big Lots Furniture, Dunham’s Sports and CVS Pharmacy were prominently on the plaza’s rent roll.
In December 2012, just as the CMBS loan was nearing maturity, Heights Plaza was impacted by an unexpected electrical fire that damaged 100,000 SF or one-third of the property. While there were no serious injuries sustained, many of the plaza’s tenants experienced considerable property damage and subsequent losses as a result. The owner was left with a significant drop in cash flow and was unable to refinance the loan conventionally.
What others may have considered an unfortunate situation, owner Steve Kogut saw as an opportunity for rejuvenation. It was clear that with the relocation of its large retail anchors, Heights Plaza needed to proceed in a new direction. Within the Alle-Kiski Valley, there are two prominent hospital networks, the Allegheny Health Network and UPMC. The two hospital networks actively vie for outpatient care and diagnostic facility real estate throughout the valley, offering a primed area for mixed-use medical office property options.
Kogut approached Progress Capital Advisors during this repositioning phase. Kogut had a vision of investing in the property to encourage new medical use tenants. In order to implement the business plan, Kathy Anderson of Progress Capital arranged a $16.25M 24-month bridge loan to retire the CMBS debt and allow the owner time to rebrand the center into a retail/medical destination.
Since engaging Progress Capital, Kogut has drawn in several new medical use tenants, such as a physical rehabilitation center, Planet Fitness, urgent care facilities for UPMC and the Allegheny Health Network, as well as many multi-specialty physician practices. The owner has also rebranded the plaza “Harrison Town Square” to advocate the property’s repositioning strategy and highlight its renaissance. The property has experienced an increase in occupancy from 50% after the fire to over 75%, paving the path forward toward stabilization.