Co-owners of Foxwoods mall locked in dispute over development fees
Almost since the day the Tanger Outlets at Foxwoods opened, the mall’s co-owners have been wrangling over more than a half-million dollars in development fees one paid the other.
The minority partner alleges the majority partner’s “ultimate goal” is complete ownership of the property, court filings show.
Built on land leased from the Mashantucket Pequot Tribe, the mall is owned by Fashion Outlets at Foxwoods, whose partners include entities owned by Greensboro, N.C.-based Tanger Factory Outlet Centers and Sheldon Gordon, a well-known retail developer with offices in Greenwich and North Palm Beach, Fla.
Tanger owns 67 percent of Fashion Outlets, Gordon 33 percent.
In a lawsuit filed in federal court in October 2015, six months after the mall opened, Fashion Outlets claimed it mistakenly had paid Gordon nearly $1.6 million in development fees though the parties had agreed that Gordon’s fees would be capped at $1 million. It alleged Gordon refused to return the $568,000 overpayment, a claim Gordon disputes.
The suit was withdrawn and refiled in New London Superior Court, where a judge dismissed parts of it earlier this year.
Gordon filed a countersuit in May, claiming “the Tanger Companies have acted with increasing hostility toward and with the apparent intent to exclude the Plaintiffs from realizing the economic benefit from the project.” Gordon alleges that Tanger has insisted on financing terms that are favorable to Tanger; has attempted to acquire rights over Gordon's equity interest in the mall; and is “converting or stealing (Gordon’s) funds while issuing false financial statements to conceal such wrongdoing.”
Neither Tanger nor Gordon, nor their attorneys, responded to messages seeking comment.
According to the Gordon suit, Gordon Group Holdings reached an agreement with the Mashantuckets to develop the mall in 2010, and signed a ground lease for the property in November 2011.
“In or about December of 2011, it became clear that continued development of the Outlets Center would benefit from a co-developer to contribute additional funding,” the suit says.
Gordon and Tanger reached their Fashion Outlets at Foxwoods agreement in April 2012. The parties also came to terms on a management agreement that called for both of them to be paid management fees derived from mall rental income.
The mall was built over 20 months, starting in September 2013. Construction costs, originally budgeted at about $107 million, ultimately grew to $130 million, according to the suit.
Gordon Group Holdings has been involved in a number of major retail projects, including The Forum Shops at Caesars Palace in Las Vegas and The Shops at Mohegan Sun. Tanger owns or has an ownership interest in more than 40 outlet shopping centers in the United States and Canada.
In May, Tanger sold the outlet mall it owned in Westbrook for about $40 million, according to the company’s latest quarterly report.
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