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CITING KMART, MALAN SEEKS TO LIQUIDATE

Malan Realty Investors is recommending a plan of liquidation to its shareholders, saying the bankruptcy of Kmart Corp., its largest tenant, has contributed to a cash flow problem. Kmart, which has stores in 27 of the company’s 65 properties, accounts for 25 percent of Malan’s annualized base rent (ABR).

Kmart will shut four stores in Malan’s portfolio as part of the 284 closures it announced March 8. The four units, totaling 346,430 square feet of gross leasable area, generate ABR of $1 million, about 4 percent of Malan’s total.

The Bingham Farms, Mich.-based landlord has proposed a plan to sell all its properties and other assets and has suspended dividend payments indefinitely. The plan, offered by the company’s directors, is subject to shareholder approval at Malan’s annual meeting this summer.

VENTURE BUYS SERVICE MERCHANDISE LEASES, ASSETS FOR $235 MILLION

A joint venture of Developers Diversified Realty Corp., Lubert-Adler Funds and Klaff Realty has bought the asset designation rights for the real estate of Service Merchandise Co. for $235 million. Those rights will enable the venture to determine the ultimate disposition of the bankrupt retailer’s 227 sites, which amount to 12.4 million square feet. Service Merchandise leased about 180 sites and owned more than 40 others.

Cleveland-based Developers Diversified holds a 25 percent interest in the joint venture and will earn fees for the management, leasing, development and disposition of the real estate portfolio.

Klaff Realty is a Chicago-based developer, while Lubert-Adler Funds is a Philadelphia-based private real estate investment fund.

SIMON PROPERTY GROUP PURCHASES TERRORISM INSURANCE FOR PORTFOLIO

Simon Property Group, Indianapolis, has obtained terrorism insurance for Mall of America and its entire retail portfolio, settling a dispute with GMAC Commercial Mortgage, the lender for the Bloomington, Minn., megamall.

The developer has obtained a $100 million policy on Mall of America and a second $100 million policy covering the remainder of its portfolio. The coverage is provided by Lexington Insurance Co., a subsidiary of American International Group (AIG).

The dispute arose because terrorism insurance was excluded from the all-risk policy that covers Simon’s portfolio. GMAC stepped in and bought a terrorism policy from AIG with a $750,000 annual premium, which the developer argued was excessive, costing three times as much as the premium on its general policy.

Simon did not reveal the premiums on the plans, saying only that the amount is “substantially less” than the premium GMAC negotiated earlier this year.

GENERAL GROWTH ACQUIRES JP REALTY

General Growth Properties has bought JP Realty and its 18 regional malls for $1.1 billion and at press time was said to be eyeing Westcor Partners. The Chicago-based developer is funding the deal with capital it raised for its unsuccessful January bid to buy Rodamco North America. JP Realty’s portfolio comprises 10.3 million square feet of gross leasable area (GLA) in eight Western states, with eight centers in Utah and Idaho. It also owns 26 community centers with a total GLA of 3.4 million square feet.