Northtown Financing Deal Struck

NorthTown Mall has crossed another threshold in its effort to become the Inland Northwest’s dominant retail center.

Sabey Corp. landed permanent financing last month for NorthTown, which has been plagued by rumors of financial instability and mismanagement since Seattle businessman David Sabey bought the mall in 1988 and started an ambitious expansion.

Although not willing to divulge the amount of the loan, Sabey Corp. representatives were happy with the agreement, financed by The Teachers Insurance & Annuity Association-College Retirement Equities Fund.

“All I can tell you that they’re one of the biggies, and so that bears well for NorthTown and Spokane,” said Michelle Driano, a spokeswoman for Sabey Corp.

The loan replaces Security Pacific Bank’s short-term financing, which was to expire in 1995.

TIAA-CREF, founded in 1918, is the nation’s largest pension fund with $136 billion in total assets, according to a TIAACREF spokeswoman at the New York City headquarters in Manhattan.

But refinancing hasn’t necessarily allayed tenants’ concerns regarding David Sabey, who has been a controversial figure in Spokane.

A group of NorthTown merchants filed a lawsuit last summer against Sabey Corp. over common-area maintenance charges and the right to see corporate expenditures. Attorneys for Sabey argue that most merchants do not have a right to a company audit.

Many store owners said last week that they hadn’t heard about the new financing and those who did were skeptical that it would translate into benefits for merchants.

“Financing will have no effect on us whatsoever,” said Doug Jessup, owner of Phoenix Gallery.

“It may be a positive thing, if they use it to get better marketing to get more people into this market, but who knows if they will use it for that,” he said.

Driano would not comment on how Sabey Corp. plans to use the financing.

At least one pessimistic merchant said the financing could actually diminish their business. Pickle Barrel restaurant owner Ted Bare hypothesized that the financing may bring the reputation of financial stability, which could lure more stores to the mall.

“That could have a tendency to divide the shopper pie in even smaller pieces,” Bare said.

Sabey Corp. began renovations on NorthTown Mall in 1988. When the remodeled mall debuted in 1992 with more than 1 million square feet of retail space - more than double its former size - Sabey Corp. had spent more than $130 million in renovation.

In many respects, the expansion has been a success. The mall is now about 90 percent occupied, and it has appeared to prosper while the downtown retail district has languished. That retailing shift, along with the bankruptcy and closure of Sabeyowned Frederick & Nelson, has contributed to Sabey’s image problems in Spokane.

Transferring loans is typical when a corporation finishes a multimilliondollar construction or renovation project, said Mike Decesare, public relations administrator for Sabey Corp.

It does not reflect financial instability or dissatisfaction between Security Pacific Bank and Sabey Corp., he emphasized.