5Qs for Second Horizon Capital’s Howard Levine on Revitalizing Promising Shopping Malls (Chain Store Age)

By Al Urbanski

In 2021, Howard Levine partnered with Camilo Varela to reinvest in challenged commercial real estate assets with strong potential for revitalization as community hubs.

Second Horizon Capital is an impact investment firm which, in less than five years, has reviewed more than 100 retail assets against their criteria. To date, the company has acquired just seven of them, including Stony Point Fashion Park (Richmond, Va.), Chicago Ridge Mall (Chicago Ridge, Ill.), and Orange Park Mall (Orange Park, Fla.).

Chain Store Age spoke with Levine to find out more about Second Horizon’s Capital’s mall renaissance project.

Levine: "We're focused on being a show company, not a tell company."

What vital essentials do you consider in addressing malls that you feel can be reborn?
There are several dozen factors we consider. Demographic growth, local incomes, population density, land scarcity, market position, community structure. We invest in centers that we feel have long-term futures serving as community hubs. We spend significant time and focus closely on each of our markets. We engage directly with our teams, municipal stakeholders, and local community organizations to learn all we can.

You must be very particular about your purchases. Second Horizon’s seven centers cover a wide swath of the United States map.

Yes. We have centers in Arkansas, Florida, Illinois, Massachusetts, Utah and Virginia. Our footprint targets centers that fit our investment model more than targeting specific markets. Typically, our acquisitions come out of receiverships, foreclosures, or sponsors undergoing meaningful capital changes and are centers that have experienced at least three to five years of underinvestment. 

Each center, regardless of market, faces a unique path to reflect its local customer base and need. To succeed, centers need to evolve from a more cookie-cutter solution to a community specific approach.

What are some of the biggest investments you’ll be making across your portfolio?

Investing in tenants, driving community engagement and enhancing each center’s infrastructure.  We are focused on supporting new and reinvested tenants – national, regional and local. We are actively expanding our community partnerships. For instance, we are planning more than 800 community events this year across our centers. 

We are driving sustainability investment and in building operations. We’re making improvements in things like roofing, HVAC units, parking lots, signage, holiday décor and more. Most of our centers are coming out of pretty lengthy terms of underinvestment. We face assets where so many things haven’t been addressed.

Are you finding that you’re getting second looks from some top anchor tenants that left some of your malls?

Second Horizon Capital is focused on being a show company rather than a tell company.  Our investments of time and capital demonstrate our commitment to stewarding each center. As we invest, we want our tenants and our communities to quickly see how we operate. These enhancements make meaningful impressions. Those moments matter a lot. They demonstrate our dedication to making the improvements that help our centers succeed. 

Are you operating the malls yourself, or are you using third-party operators?

We use third-party leasing and management providers at each of our centers. Each center has a different investment approach that’s focused on its community. So we focus on matching leasing and management teams to meet the needs of each investment’s challenges and opportunities. 

View the article on Chain Store Age’s website here.