Corrections or additions?
These articles by Barbara Fox were prepared for the October 22,
2003 issue of U.S. 1 Newspaper. All rights reserved.
Siegel Sells His Baby, Mercer Mall
After 30 years of developing it, owning it, and
it, Harvey Siegel has sold his favorite child, the Mercer Mall. It
took him nine long hard months to do it. Siegel, 69, received the
proverbial offer he couldn’t refuse — to make a profit without
the usual tax consequences of making a profit — through an unusual
arrangement with a Maryland-based real estate investment trust.
In a deal that closed October 15, Federal Realty Investment Trust
(FRIT) will pay $4 million annual rent to Siegel for the next 20
and then it will have the option to purchase the 15 million
property for $55 million. Siegel chose this purchase structure, called
a "master lease," because he has owned the property for so
long that he would have to pay a whopping amount in taxes if he sold
it now. Under this structure, when he dies, the property passes at
its current value to his wife, who will then have to pay only the
capital gains tax.
"This major purchase was a unique structure that will likely
the poster boy of this type and magnitude," says Siegel. "The
nature of how it was structured provides a legal, benign conveyance
of long-held properties without the adverse tax consequences normally
inherent in the outright sale."
Adding difficulties to the transaction, FRIT also simultaneously
a 20,000 square foot parcel (Men’s Warehouse and Joe Canal’s Discount
Liquors) for $5 million and has a contract on the 40,000 square feet
occupied by the Olive Garden, and the former Wiz electronics store.
"It was incredibly complicated," says Siegel. "Within
the master lease were two `sandwich’ leases. And the Kmart property
was in bankruptcy, and all that had to be folded into the master
Also we entered simultaneously into the purchase of the New York Deli
building. It was nine months of hard work — I felt like a student
and this was truly my final exam."
The challenge of putting the deal together ameliorated the pain of
giving it up his favorite mall. Though he has financial partners
has always preferred to be the lone captain on his projects, ever
since an auto racing instructor nearly turned turtle in Siegel’s Alfa
Romeo with Siegel in the passenger seat. "I had only one thought,
that I wasn’t even at the wheel," he says now. "That I was
going to die didn’t disturb me. But I decided I would not let myself
be under someone else’s control. It was going to be ME whose hands
were on that wheel. I want to be in control of my destiny."
That thought has governed his business and personal life ever since.
He has built shopping strips, not malls, so he could stay in charge.
The grandson of the founder of National Shoes, he went to prep school
at Choate and to Tulane for his business administration degree,
off to spend two years in the Air Force. He is married to his second
wife and has four children.
In 1973 after putting together four parcels of land (the first of
a string of complicated deals) he began getting approvals to build
the Mercer Mall, and the first version of it was finished in 1975.
Simultaneously, across the highway, Quakerbridge Mall was being built
four times bigger.
He didn’t pay a high price for the land, perhaps because no one else
had both the vision and the money. "To realize the potential of
blank piece of paper — I see it. Other people don’t see
Siegel persuaded Lawrence Township to give him most of what he wanted
in that first round "I would prevail on them to try to let me
tinker with it. It took a lot of talking, and walking, cajoling, and
asking, to get them to serve us." He credits his success in
along with the township to his long-term ownership. "My hands
were on every operation for so long that I saw the implications of
whatever I did."
In a downswing of the economy from 1979 to 1981 he lost half his
including the A&P. He forgave a lot of rents. "If their body was
warm we didn’t throw them out because that would create a domino
Also around that time he had open heart surgery (he had a stent
and is now a vegetarian.
Each bad period in the economy brought its own woes, but the biggest
was losing Kmart. Though he waged a legal battle against the plans
for Nassau Park, he now considers his mall and Nassau Park as one
giant destination center, together with Quakerbridge Mall and future
development at the American Cyanamid site on the other side of the
For 2003 he was getting ready to do yet another renovation. He had
already signed a supermarket, ShopRite, for part of the space formerly
occupied by Kmart, and the remainder of the space would be taken by
a furniture store. He says he was being courted by potential buyers
who coveted that prime location, and claims he didn’t intend to sell,
that he strung the suitors along in order to get their renovation
"I usually think I can do pretty much everything that has to be
done, and I intended to harvest their best ideas to utilize them in
my own renovation endeavors," says Siegel. "On one fateful day
in March I went to the FRIT headquarters, and I found, after reviewing
the `before’ pictures of dilapidated properties and the finished
that they in fact were able to do it better than I could. They have
their own landscaping, design, graphics and sign divisions, their
own major tenant leasing department, and their own small store leasing
department. They are a billion dollar company with 15 million square
feet of space, and they do a class act with open shopping centers,
better than most of the other people in the business. Each center
was uniquely redeveloped."
"I had the money to do it and knew how to do it, but they said,
`Harvey, you don’t have to go through this. You’ll get pretty much
the same money as if you did it yourself.’"
"I realized, I’m going to be 69 years old, and why should I go
through other bankruptcies?" In addition to Kmart, the Mercer
Mall has seen such recent bankruptcies as Drug Emporium, General
and, most recently, the company that owns Chevy’s. "Each time
that happens it requires a very strong financial commitment and a
whole cadre of relationships," says Siegel.
So Siegel decided to let go of one set of problems and turn his
to his first love, auto racing. He has built a motorsport racetrack
in Virginia, where he races his British Elva, and hopes to build
also in Virginia.
Gary Backinoff of Ridolfi, Friedman, Frank, Edelstein & Backinoff,
represented Siegel in land use matters and the closing.
Siegel firmly believes he is leaving the place in good
hands. "They will make that shopping center a prize," he says.
But a big public firm paying on an expensive lease, covering its
spending a lot of money on refurbishing, and paying dividends to
is certainly going to raise rents. Tenants that protested over high
rents will yell even louder, and some won’t survive.
Siegel insists the new rents "will be worth it" because of
the elegant and pristine atmosphere FRIT will create. He points out
that FRIT saves lots of money because "their cost of capital is
a fraction of mine, maybe 1.4 percent. They can use those funds to
improve the center and still provide a strong return for their
not possible for mortals like me. Public companies using public money
and borrowed funds at wholesale can afford to pay hefty overhead and
still come out with a strong bottom line."
No, he’s not slowing down to spend time with his grandchildren,
none are married. "Besides, I am having a good time with my race
tracks. Paul Newman comes down there all the time, and I have a good
time with my race car." He owns a share in a seven-passenger
421 that he uses to get back and forth.
But the Mercer Mall, admits Siegel, is currently shabby. "My
died, and we had a bankrupt tenant, and the combination of costs was
staggering. I have renovated every seven or eight years for as long
as I owned the shopping center, and it’s been nine years." Siegel
says that FRIT will remodel in a high quality traditional style, but
that he didn’t have the money for that. It takes less money to paint
on a look. The last "look" was Mexican, the result of a Siegel
trip to California. This time around, "I was going to go graphic
— create flat surfaces and give a cool, hip look."
At one point, Siegel says, he was going over all the details in a
room with 15 people — representing all the different aspects of
running the mall that he and his small company had been handling by
themselves. His own operation in Manhattan, Bristol Development, has
four employees plus two staff members in the field for the Mercer
Mall and a couple of shopping centers in South Jersey. "I had
spent so many days down there, for so many years. I actually felt
a moment of sadness, that this baby I birthed has gone off to college.
The Mayor of Mercer Mall has resigned."
Street, New York 10022. Harvey Siegel, president. 212-758-7455; fax,
Starting in January the Princeton Regional Chamber of
Commerce hopes to get a lot more walk-in traffic. Kristin Appelget,
the chamber’s CEO for just over one year, plans to move the
from the second level of Rockingham Row (next to the Tre Piani
in Princeton Forrestal Village) to the heart of Princeton, a first
floor office at 9-11 Vandeventer Avenue. The office was formerly
by James A. Vito, a dentist who has just moved to Lawrenceville’s
Main Street. Zoning approval is needed before the lease is signed.
The chamber had been located in Princeton Borough from its founding
in 1959 until 1987, when it moved to Forrestal Village. From this
new downtown location the chamber’s five-person office will be better
able to serve as a visitor’s center and be more accessible to downtown
merchants — and the problems of downtown, such as parking, will
be very visible.
Appelget is working hard to rebrand the chamber as a regional
In her first year a membership drive resulted in a 55 percent increase
in membership for a total of nearly 600 members.
The 103 Morgan Lane building that Merrill Lynch had
occupied is ready for new tenants. The building has significantly
more powerful air conditioning equipment than is normal, says Peter
Zaslowe, leasing agent at Lincoln Property Company’s Edison office.
"There is a significant amount of air conditioning, because this
was their payroll department, and they had a high tech computer
Zaslowe’s Dallas-based real estate firm bought the property from LCor
in 1998 (www.lincolnproperty.com). It is renting for $23.50 a square
206), Suite 1, Lawrenceville 08648. Joseph Asir, managing partner.
609-620-0949; fax, 609-620-0955. E-mail: email@example.com.
The full-service immigration law practice expanded by opening a second
office last month. Formerly known as Princeton Immigration Group,
the three-person firm is keeping its office at 3735 Lawrenceville
Road, Princeton 08540. The new office is at 2683 Main Street —
and both offices are on the same road, Route 206.
Joseph Asir, who comes from four generations of attorneys on his
side, went to Loyola College in Madras, India, graduating in 1984,
and then went to Madras University for his law degree. After
in India for four years he came to New York to work at the United
Nations and also obtained a master’s degree at Long Island University.
He graduated from Georgetown Law School and practiced in Westchester,
New York, and then in Princeton at Dechert. His wife is a forensic
scientist, and they have two children under six.
With two paralegals to assist him, Asir opened his own practice in
2000 to focus on immigration law. "Eighty percent of my practice
is immigration, and I still do 20 percent of corporate work,"
he says. Since the Patriot Act, he says, illegal aliens are beginning
to come to attorneys for the first time.
"The bulk of my practice is helping professionals from the high
tech and pharmaceutical communities, but I have also found a hidden
pool of restaurant workers, maids, and nannies who are contributing
to the economy. They have never really sought legal help because they
were frightened of being turned over to the authorities, but if they
try to get their status changed, most of them have good cases."
224, Lawrenceville 08648. Andrew Chapman, president. 800-272-1325.
Two water companies, on the brink of a merger, moved to Lenox Drive
on Friday, October 17. Elizabethtown Water Company made the move from
Westfield and New Jersey American Water company made the move from
Haddon Heights. Maureen Duffy, spokesperson for Elizabethtown, says
the companies have the same parent, RWE AG, a 100-year-old German
company with core businesses in electricity, gas, water and
The 60-person office is headed up by Andrew Chapman, president of
Princeton 08540. Greg Besner, CEO. 609-430-7400; fax, 609-430-7500.
On October 10 Restricted Stock Systems released software, RSS Connect,
that electronically links brokerage firms and public corporations
involved in the execution and reporting of corporate insider
RSS Connect bridges the data gap between brokerage firms transacting
for Section 16 insiders and public companies filing insider trading
reports, according to a press release (U.S. 1, July 2, 200)
"RSS Connect creates the first infrastructure for transacting
and reporting restricted and control stock transactions, which now
account for a growing share of all equity transactions," says
Greg Besner, CEO of RSS.
professor at Mercer County Community College and coordinator of the
at Dow Jones on Route 1 North, controller at Brookside Veneers in
Cranbury, and a Coldwell Banker real estate agent.
vice president of community and workplace programs for Johnson &
and chairman of New Brunswick Tomorrow, where he established a
care center at New Brunswick High School.
blacksmith, he and his wife operated Raven Studio in Lambertville.
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