SALT LAKE CITY — A company headed by the founder of the business now known as EnergySolutions has purchased the historic Trolley Square Shopping Center.
S.K. Hart Properties LC announced the acquisition Friday.
The landmark property in Salt Lake City has been a staple of the community for many years but has faced challenges recently due to the severe downturn in the economy and went into receivership late last year.
S.K. Hart Properties LC, an affiliate of S.K. Hart Management LLC, is a Utah-based private investment management firm with diversified investments in real estate and companies operating in various industries worldwide. Headed by Iranian-born Utah businessman Khosrow Semnani, the company has significant commercial property holdings in Utah and California.
Semnani founded Envirocare in 1988. The company later changed its name to EnergySolutions when it was purchased by Steve Creamer in 2004.
The new owner said the company plans to make significant upgrades and improvements to Trolley Square while retaining its historic integrity and charm.
“This is a very exciting transaction for our company, the state of Utah and the city of Salt Lake as a whole,” said Semnani, CEO of S.K. Hart Properties.
“While the center poses certain challenges, we are excited to return Trolley Square to its former glory, while simultaneously having a positive impact on the local neighborhood and the community at large," he said. "Despite the economic downturn, the current businesses at Trolley have continued to survive and thrive and we intend to complement them by bringing in first-class retailers and restaurants from around the country, as well as local retailers.”
In November, the 3rd District Court of Salt Lake City appointed Bill Hoffman, CEO of San Diego-based Trigild, as receiver of the historic property.
Situated on 13.5 acres, the 318,562-square-foot, two-story retail center is located at the corner of 600 South and 700 East.
The once-thriving retailer and entertainment center with more than 40 tenants had been in financial distress recently and was the subject of two lawsuits.
One suit filed by Bank of America in November claimed that then-property owner Trolley Square Associates defaulted on a loan and owed more than $57.6 million. The lawsuit stated that Trolley Square failed to act in accordance with loan documents and turn over income generated by the shopping center once the loan went into default.
It was Bank of America that asked the court to appoint a receiver to run the mall in an effort to secure and collect rents from tenants, as well as maintain the property.
Another lawsuit filed by maintenance and engineering firm Sentinel Building Services accused Trolley Square Associates, management company Unico Properties and senior property manager Dawn Katter of failing to correct several building, fire, health and safety code issues at the property.
That suit alleged that Trolley Square's owners and management conspired to avoid spending the money necessary to make the repairs needed to bring the mall into compliance with building, health, fire and safety codes.
The suit, which sought punitive and general damages, also alleged that ownership and management wrongfully terminated the maintenance contract with Sentinel.
At the time, Trigild general counsel David Wallace said the company would work to improve the property with the eventual goal of finding a suitable buyer, ideally within about a year.
Semnani said each of the lawsuits have been resolved and his company has a plan to restore Trolley Square to its once-prominent status in Salt Lake City.
“It’s a valuable piece of property,” Semnani explained. “At one time, it was the jewel of Salt Lake. It’s a historic structure that can have a bright economic future.”
His vision for the property is to spend more than $1 million over the next 12 to 18 months to make improvements to the center and “give it a really good facelift.” Once updated, he said Trolley Square will complement the other retail centers in the downtown area.
The long-term goal will be to attract more retail and high-end restaurants to Trolley Square through extensive marketing and negotiation, he said. Currently the property is 52 percent occupied, and great efforts will be made to get more tenants to fill the now vacant space.
“We’ve had a number of interested groups (contact us) that want to come here,” Semnani said. “We want to make sure that we get the right clients here.”
News of the acquisition was welcomed by some tenants who are hopeful that new ownership will create a new atmosphere at the once-bustling shopping center.
“It’s a step forward for us,” said Catherine Weller, co-owner of Weller Book Works, which moved to Trolley Square from its longtime downtown Main Street location 15 months ago. “Our experience (so far) has been up and down. We’re dependent upon foot traffic and the more businesses that are here, the better it will be for all of us.”
Not every tenant was as optimistic on Friday. John Cottam, owner of The Spectacle eyewear shop — which has been a Trolley Square tenant for 28 years — said the situation has gotten so bad with management frustrations and declines in revenue that he is actively looking to relocate his business.
“If it’s not going to be better, then I’m going to bail,” he said. “There are other places that want me and other places (where) I think I can make money.”
He said he would much rather stay at Trolley Square, but that decision will depend heavily upon how confident he is that the property will be managed in a more profitable fashion.
“This is such a unique property. This set of buildings in any other major city would be jammed with tenants and shoppers,” Cottam said. “That’s what I would like to see again.”
Eric Shaw, director of the city's Community and Economic Development, said news of the sale was welcome.
"Having a Salt Lake City firm continue operations and improve such a distinctive retail center is fantastic news for both its tenants and the entire community," he said. "The combination of a commitment by outstanding local businesses housed in the center, years of improvements to the location, and the vision of the new owners, position Trolley Square to flourish."