Future Looks Fuller -- Costco At Aurora Village? -- Discounter Eyes Frederick's Property As Mall-Renovation Plan Dies

SHORELINE - The long-delayed Aurora Village shopping-center renovation is dead, the lender has taken control of the property and Costco Wholesale may build a store at the center.

Vancouver-based Pan Pacific Developement Corp. said yesterday it is selling a majority ownership in its real estate assets to Toronto-based Revenue Properties Co. Ltd. for $41.7 million. But the sale excludes the beleaguered Aurora Village mall.

The shopping center's ownership will be transferred to Aurora Northwest Realty Inc., an affiliate of Citicorp, the project's lender.

"A condition of Revenue's investment in our company was the limitation of all liabilities. . . .," says Tom Sroufe, senior vice president and general manager of Pan Pacific's Seattle office. "We jointly concluded that continued ownership of Aurora Village was an unacceptable risk for Pan Pacific."

Aurora Village will not continue to sit empty, however. James Sinegal, Costco president, says the warehouse-style discounter will probably buy the Frederick & Nelson property at Aurora Village. A U.S. Bankruptcy Court judge yesterday approved Costco's proposal to purchase the closed F&N store at Aurora Village for $6.7 million. But Sinegal says Costco still needs to work out details, such as parking, before it will make the purchase final.

The fate of the rest of the center will probably be determined within the next six months. But the original two-level mall plan is "clearly dead," Sroufe says.

The original renovation plans called for an upscale, 770,000-square-foot shopping center accommodating 140 tenants, opening this year. Instead, the current 530,000-square-foot center, which once housed 60 tenants, sits nearly vacant, and redevelopment is on indefinite hold.

The redevelopment has been stalled for some time. Frederick & Nelson closed its Aurora Village store in September after financial troubles forced the retailer to take dramatic cost-reduction actions.

Recently, Nordstrom said it would close its Aurora Village store May 30. Nordstrom management said the long-delayed renovation, coupled with the closing of F&N, made further operation of the Nordstrom store economically unfeasible. The center, built in 1961, has been targeted for redevelopment several times by developers.

Despite its failed efforts to redevelop Aurora Village, Pan Pacific will probably continue to be involved in any future development at the center. The lender and Pan Pacific have not reached a formal agreement, but preliminary plans include allowing Pan Pacific to continue to manage the project, Sroufe says.

The sale of a majority interest in the rest of Pan Pacific's assets to Revenue Properties gives the new buyer just over 60 percent ownership, says Theodore Sherman, Revenue president and chief executive officer. After the sale, Revenue's properties will be equally split between the the United States and Canada, Sherman says.

Pan Pacific's other assets include Olympia Square in Olympia, Sunset Square in Bellingham and the Cascade Mall in Burlington, Sherman says.