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Shopping Centers Today -> April 2002
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IS TAKEOVER FRENZY LOOMING?
By Dave Bodamer
Some might get the impression that the industry is about to be reshaped by another major consolidation like the one that saw Simon Property Group absorb DeBartolo Realty Corp. in 1996.
Westfield ascended the hit parade of America’s largest developers when it bought some of the remaining malls belonging to The Richard E. Jacobs Group last year, continuing the latter’s divestiture of properties. Then it went on to play a key part in the titanic struggle for Rodamco North America, a deal that would make it the third-largest developer in the United States. Meanwhile, General Growth Properties, the country’s second-largest developer, has been working hard to maintain its position. It was excluded from the Rodamco party, but has instead bought Salt Lake City-based JP Realty and its 18 regional malls. At press time there was also speculation that the Chicago-based developer had its eye on closely held Westcor Partners, Phoenix, and its 12 malls.
The Macerich Co., Santa Monica, Calif., said in its 2001 year-end report delivered in late February that it is looking for buying opportunities this year.
Are we seeing a chain reaction here that will leave the industry with fewer and fatter mall players? Analysts don’t think so.
“It can certainly be argued that General Growth’s acquisition of JP Realty was prompted by its failed attempt to buy Rodamco, as it needed to put the cash it raised in December to work,” said Salomon Smith Barney REIT analyst Ross Nussbaum. “But I wouldn’t say that the Rodamco deal has forced everyone else to act.”
While some regional malls owned by institutional investors and pension funds could change hands this year, there’s no sign of a major reconfiguration of the industry, said Chris Niehaus, a managing director at Morgan Stanley Dean Witter. “I’m not aware of any other mall mergers in the works.”
For his part, Westcor President and CEO Robert L. Ward is playing down speculation about his company’s future, although he acknowledged that the company had hired New York City-based Eastdil Realty to explore recapitalization options, including the sale of a percentage of the company. Eastdil is a real estate investment bank that specializes in the financing, disposition, merger/acquisition and asset management of real estate properties.
“It’s something done all the time,” said Ward, who is a past chairman of ICSC. “I think some people are reading more into it than there really is at this stage.”
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