The owner of Utah's new National Hockey League franchise has acquired a shopping mall near Salt Lake City, where it plans to build a training facility in a new spin on national retail redevelopment and diversification.

Smith Entertainment Group, whose holdings include the Utah Hockey Club and the Utah Jazz pro basketball team, on Thursday purchased The Shops at South Town in Sandy, Utah, from Los Angeles-based Pacific Retail Capital Partners. Terms of the deal weren't disclosed.

The mall will remain open, but Smith Entertainment will be developing a state-of-the-art practice and training facility for its NHL club on a parcel on the 111-acre site, creating what Pacific Retail called "the ultimate mixed-use destination." A groundbreaking for the project, which is slated for completion next year, is scheduled for Aug. 12.

In May, Smith Entertainment announced it had entered into a contract to develop its practice rink at the South Town mall, for use by the NHL team — the Arizona Coyotes — that's relocating to Utah. The acquisition of the entire property is a new twist to its original plan.

A number of sports team owners have invested in new stadiums and arenas that include retail and entertainment space as part of those developments, according to Rudy Milian, president and CEO of Woodcliff Realty Advisors, a retail consultant not involved in the Utah project. And at least one NHL team, the Washington Capitals, has its practice arena — the MedStar Capitals Iceplex — above a parking garage adjacent to the Ballston Quarter mall in Arlington, Virginia.

But Milian told CoStar News in an email that he couldn't immediately recall an example where a team owner had purchased a mall, as is the case with Smith Entertainment and South Town. But adding a new component to the "embattled" mall, which was built in 1987, to rejuvenate it and transform it into it mixed-use property makes sense, according to Milian. Retail landlords all over the United States have been adding nontraditional tenant uses to their rosters — such as recreation, fitness and healthcare — to boost foot traffic at their properties, and that's what's happening at South Town.

"The buyer wins because it seeks out public funding/subsidies to create a new training facility and then has ownership of the real estate that will be developed into something that makes sense for today and tomorrow as a mixed-use complex," Milian said. "Ideally, retail, entertainment and sports units will comprise the new site and will be commercially viable with long-term financial returns. The seller wins because it monetizes the asset and will get fees from redeveloping the site and managing the real estate uses. ... The community wins because rather than have an outdated very large mall with declining occupancy, it will have a redeveloped mixed-use project that will succeed into the next decade."

Smith Entertainment, led by Ryan and Ashley Smith, is a sports powerhouse in Utah. It owns Delta Center in Salt Lake City, the arena where the Jazz play and the future home of the NHL team. Its portfolio also includes the MLS men's soccer club Real Salt Lake, NWSL women's soccer team Utah Royals, and both squads' home venue, America First Field.

Smith Entertainment's purchase includes the mall, the surrounding parking lot, and some adjacent retailers, restaurants, and hospitality buildings within the site's footprint. The practice facility will be built onto the southeast end of the mall and will include a minimum of two NHL-standard regulation ice surfaces and the team’s official offices. The company said it will also make the facility available for community purposes outside of Utah Hockey Club’s designated use, such as youth and amateur hockey and recreation.

Pacific Retail, a landlord with a portfolio that totals 24 properties encompassing over 20 million square feet, will continue to manage and handle leasing at the Utah mall "to ensure continuity with the ownership transition and minimize disruption for consumers," the company said in a statement. Pacific Retail will lead Smith Entertainment's leasing efforts for the mall in partnership with Woodley Real Estate.

Pacific Retail said it will use the proceeds from the sale to pay off the outstanding balance of the loan in full for the property and to reinvest elsewhere in its portfolio.

“Today is a crucial step forward in expanding [Smith Entertainment's] real estate footprint and public benefit offerings for our fans and residents of Utah,” said Jim Olson, a company executive and project lead for The Shops at South Town, said Thursday in a statement.

Santa Monica, California-based Macerich sold the South Town mall to Pacific Retail a decade ago, and the center lost Macy's as an anchor in 2021, according to Milian. The planned training facility "will revitalize the area in addition to bringing in NHL players and hockey fans as the city of Sandy hosts a state-of-the-art hockey training center," he said.

Pacific Retail CEO Steve Plenge echoed that prediction.

"By strategically repositioning The Shops at South Town and preparing it for its next phase, we've not only secured a successful exit for our investors but also laid the groundwork for a transformative project that will benefit the Sandy and greater Salt Lake City communities while supporting Utah's exciting entry into the NHL," Plenge said in a statement.

The deal exemplifies Pacific Retail's strategy of clearing a path for a property's highest and best use, according to Chief Financial Officer Oscar Parra.

"At this specific site, we spent years methodically removing obstacles, updating old agreements, and setting the stage for modern, mixed-use development," Parra said in a statement. "When [Smith Entertainment] and Woodley Real Estate came along, they found a site that was ready to go. ... We've seen firsthand how this approach can elevate a property's potential and value."

In certain cases, Pacific Retail has seen malls in its portfolio "jump from B+ to A- ratings just by reducing retail square footage and introducing mixed-use elements," he said.

Woodley Real Estate represented Smith Entertainment in the transaction.