New Park Plaza Mall owners Howard Levine and Camilo Varela have a vision for the Little Rock retail landmark as a thriving hub for shopping, dining and spending time, and they shared some of their expectations last week for the second project of Second Horizon Capital.
Levine and Varela, managing partners of the investment group in Boca Raton, Florida, wouldn’t say how much they paid for the distressed 404,617-SF mall, but they plan to make “substantial investments” quickly to stabilize the mall’s retail base, improve its infrastructure and “catch up on deferred maintenance,” Levine told Arkansas Business in an interview Wednesday.
“In the near term, we will be working to stabilize retail operations of the property,” Levine said, “making substantial investments in property operation, including bringing best-in-class property management and leasing to the site and increasing resources that are dedicated to community engagement.”
Arkansas Business was first to report Second Horizon Capital as the mall’s buyer, in its March 20 Whispers column. The company formally announced the deal on Tuesday.
Second Horizon’s mission is to acquire “large-format commercial real estate assets and reimagine them to drive community impact,” according to company literature. The company was founded in 2021 by Levine and Varela, two real estate veterans who met on their first day as associates at Bank of America in 2010. They say they are engaging with local stakeholders already, and that they carefully selected Park Plaza for its potential.
They bought the mall, bookended by two Dillard’s Inc. flagship stores on property owned by the Little Rock department store chain, from an entity representing investors in a mortgage-backed securities portfolio recovered from a foreclosure against CBL Properties of Chattanooga, Tennessee. The price they paid will eventually become public, but Levine said last week that he couldn’t reveal it “at this time.”
He did say that occupancy at Park Plaza is in the low 90% range, a mix of national, regional and local businesses. “As we get through the transition here, we're looking to engage with our tenant base and work through the next steps of stabilizing retail operations,” Levine said.
Shopping Fixture Since 1960
The retail site has been a fixture at Markham Street and University Avenue since 1960, when it was christened as an open-air shopping center. With its new owners comes new property management. Jones Lang Lasalle of Chicago will manage the mall and handle leasing, Levine said. JLL has 6.5 billion SF in property and facilities management nationwide.
Park Plaza patrons could soon see “more things to do and less things to buy,” Levine suggested.
“We anticipate that the center will remain retail-centric. Now, the nature of that, just as the nature of retail in general, we expect to evolve. If you think about it from a mix standpoint, just how that will unfold is still a little early to tell. But a couple of categories we would think of in that domain would be restaurants, food and beverages, entertainment, and services.”
Varela said Second Horizon selects its projects carefully, and customizes its approach to each one. Levine agreed.
“Our team completed a comprehensive review of the universe of malls and lifestyle centers across the U.S.,” Levine said. “Park Plaza was a focus target asset for our company, as well as in our investment strategy.”
It was attractive because of three main factors, he said. “The first is Little Rock’s vibrant community investment potential. The second is Park Plaza’s location: The property sits at the city's busiest commercial corridor with an anchor [Dillard’s], of course, that cares significantly about Little Rock.”
The third factor was local stakeholders agreeing “on the importance of the long-term success of the property” for the community, Levine said. “We think about malls on a very specific basis rather than thinking of malls generally.”
The investment group cares about strong demographics, meaningful population density and tenants eager to improve operations and long-term viability.
The sale included the mall’s adjoining 240,843-SF parking deck, which before foreclosure was tied to a $99.4 million mortgage originated in March 2011 by Wells Fargo Bank of Sioux Falls, South Dakota.
Name Will Remain
The Park Plaza name will remain, Levine and Varela said.
“It has been Park Plaza for a long time,” Varela said. “It was Park Plaza Shopping Center at inception and then Park Plaza Mall, and of course the name is well known in Little Rock.”
Levine and Varela created Second Horizon to help transform challenged commercial real estate assets into economic and cultural hubs, they said. Before creating the firm, Levine was a managing director in Bank of America’s Global Credit and Special Situations practice, working to restructure troubled assets. Social responsibility is a cornerstone of his business approach, he said.
Before Second Horizon, Varela was a managing director on the investment team at Equity International, Sam Zell’s private equity firm.
Second Horizon’s initial project was the Stony Point Fashion Park, an open-air mall in Richmond, Virginia.
“Camilo and I have extensive mall operating experience as part of our work in previous organizations,” Levine said. “Above and beyond mall experience, we have complementary broad real estate, construction and turnaround experience that will be very important in reinvigorating Park Plaza.”
Varela said that when malls were being built in the 1960s through the 1990s, development was relatively simple. Customers wanted one spot to shop at various outlets, to have easy parking and a pleasant setting. “Now the solution for each of these malls is going to be highly custom to each asset and each community,” Varela said. “And that’s how we focus. Our asset in Virginia isn’t apples to apples [in comparison to Park Plaza].
"Park Plaza is much more of a lifestyle center. So the solution is going to be highly customized for that. When we think about Park Plaza, progress is going to be driven by tenants, the neighborhood and the city of Little Rock.”
Mallgoers will see some changes relatively quickly, the partners said. “These transitions do take time, but from an operational standpoint we’re excited to start implementing these changes,” Levine said.
The entire project rests on the firm’s philosophy, the partners said.
“Second Horizon Capital is dedicated to being a good community partner,” said Levine. “We want to work with local organizations and small businesses to create a feature space that drives the local economy and works to be a community hub for events, gatherings and entertainment. We are working toward long-term results, where Park Plaza Mall will serve and enhance the Midtown community, Little Rock and Central Arkansas economically and as a community for years to come.”