By Paul Bubny
The venerable shopping mall may not loom large on developers’ horizons at the moment, but it certainly stands out on investors’ radar screens. Sales volume on significant retail properties nationwide was up 87% year-over-year to $12.5 billion during the first quarter
of 2012, according to Real Capital Analytics, with malls accounting for nearly three-quarters of that total.
A pair of large mall-portfolio deals accounted for about half the
$6.6 billion in sales during Q1, according to RCA. In March, Simon
Property Group, headquartered in Indianapolis, bought out joint
venture partner Farallon Capital Management’s stake in 26 assets of
the Mills LP in a $1.5-billion transaction. Simon will continue managing the malls, which total more than 20 million square feet.
In the other JV portfolio deal, the Canada Pension Plan Investment
Board joined the Westfield Group for 12 of its US properties, nine of
which are in California. The CPPIB paid $1.8 billion in equity, while
assuming property-level debt, for a 45% stake in malls including the
1.6-million-square-foot Westfield Topanga in Canoga Park, CA and
the 1.5-million-square-foot Westfield Mission Valley in San Diego.
Westfield followed up in April with a $1-billion sale of a 90%
interest in seven more US mall assets to Starwood Capital Group.
Separately, Westfield agreed to sell its 844,297-square-foot Westfield
West Covina outright to an unidentified buyer for $147 million. In
a statement, Westfield co-CEO Peter Lowy said the sales would help
pare corporate debt and then be redeployed in redevelopment
opportunities in the US, including the World Trade Center site in
Lower Manhattan. “We have previously flagged the potential divest-
ment of non-core assets in the US, and this transaction is an impor-
tant step in the repositioning of our portfolio to major retail assets
with strong franchise characteristics,” Lowy said in the statement.
Simon Property Group recently bought out its joint venture partner in a 26-property Mills LP portfolio, which included Ontario Mills (pictured) in Ontario, CA. The $1.5-billion
transaction was one of a handful of large portfolio deals that accounted for more than half the $12.5 billion in significant retail asset sales during 2012’s first quarter.