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Shopping Centers Today -> April 2003
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PREIT BUYS SIX MALLS, EYES MORE
Pennsylvania Real Estate Investment Trust (PREIT) is buying six Philadelphia-area malls from The Rouse Co. for $548 million and is also in talks to buy a separate, “significant” mall portfolio, the company said at press time.
PREIT would not disclose the potential seller of that portfolio.
Meanwhile, Rouse is purchasing a 50 percent interest in the 1 million-square-foot Christiana Mall, Newark, Del., from a PREIT affiliate for $200 million.
PREIT said it is purchasing the malls in an effort to strengthen its retail real estate holdings and exit other real estate sectors, said PREIT Chairman and CEO Ronald Rubin. PREIT has sold its remaining 7,242 apartment units, for instance, the company said. It also owns four industrial properties.
“The Rouse transaction presented us with a unique opportunity to further penetrate our core market and significantly strengthen our existing retail portfolio,” Rubin said in a prepared statement. “The high-quality assets will … serve as an anchor to PREIT’s regional mall portfolio.”
For Rouse, the sale and purchase is part of an ongoing effort to shift its portfolio focus to upscale malls, said the company’s chairman and CEO, Anthony Deering, in a written statement.
Christiana Mall, which has sales per square foot of $606, is anchored by J.C. Penney, Lord & Taylor, Macy’s and Strawbridge’s, and counts among its tenants Talbots and Williams-Sonoma.
“We’ve long admired the Christiana Mall’s powerful sales performance as exemplifying our own quality-focused strategy and could not pass up the opportunity to acquire it,” Deering said. “At the conclusion of this transaction, we believe The Rouse Co. will have the highest-quality retail portfolio in America.”
The half-interest in Christiana is being purchased from a partnership called New Castle Associates, whose top management includes PREIT executives. Lend Lease Real Estate Investment’s Prime Property Fund owns the other half of the mall.
The transaction means that PREIT’s retail portfolio will contain 28 properties, consisting of 14 malls and 14 community and power centers. Rouse will own 47 mall and mixed-use properties after the deal, which is expected to close late this month.
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