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Shopping Centers Today -> October 2002
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GLIMCHER SELLS 22 CENTERS
By Ian Ritter
Glimcher Realty Trust has sold 22 properties around the East Coast and Midwest as part of a continuing effort to pay off debt and shift its focus from community centers to malls.
The Columbus, Ohio-based company closed on 13 of the community center properties (totaling 2.1 million square feet) for $106 million in September. It expects to close on the remaining nine sometime this month. The buyer of the properties, so far undisclosed, may be named at that time, according to Glimcher. At press time the company had disposed of a total of 17 community centers to date.
“We really felt that we needed to focus on a single property type as a primary focus for the business,” said William Cornely, Glimcher COO and treasurer, explaining that malls have a better growth potential than other center types.
Accordingly, Glimcher has concentrated of late on the purchase and development of enclosed malls. Last August the company, which currently owns 23 malls in a total portfolio of 85 properties, acquired additional interest in the 933,248-square-foot SuperMall, Auburn, Wash. It now owns 73 percent of the property. That same month the company also bought out an investor to gain full ownership of the 1.3 million-square-foot Dayton (Ohio) Mall. Media reports have speculated that Glimcher is trying to develop a 1.4 million-square-foot mall in Mason, Ohio, though company officials declined to comment on that.
Last October Glimcher opened the much anticipated, upscale, 1.5 million-square-foot Polaris Fashion Place in Columbus. Polaris, which Glimcher President Michael Glimcher has likened to a retail version of a Ritz-Carlton hotel, has Saks and Lord & Taylor as two of its four anchors.
The roots of Glimcher’s strategy can be traced to 1994, when the company went public. At that time Glimcher’s portfolio contained 4 million square feet of malls and 8 million square feet of community centers. To fund its drive to acquire and develop malls, Glimcher secured a $1.1 billion financing package from Nomura Asset Capital Corp. in 1996. Today the company’s portfolio stands at 19.7 million square feet of malls and 8.2 million square feet of community centers.
But with that greatly expanded portfolio came debt. The sale of the 22 centers, which included $76.8 million in cash, made possible the payment of a $50 million mortgage scheduled to mature later this month and enabled the firm to pay down $19.2 million of a floating-rate bridge loan facility. This reduced the company’s debt to a market capitalization ratio below 60 percent.
Louis Taylor, an analyst in the New York City office of Deutsche Bank who covers Glimcher, said it is not unprecedented for REITs to sell off their community center properties and move into mall territory. General Growth Properties, The Rouse Co. and Simon Property Group have all taken the same route.
Taylor noted that malls tend to have more stable anchors and tenants than other centers. He added that many of the centers Glimcher develops or buys in the future are likely to be, unlike Polaris, medium-market properties.
Taylor said he expects Glimcher to sell even more community centers, but is likely to keep those that are next to its malls because of the lucrative symbiosis such a juxtaposition provides, he added. As for potential buyers, “I would never count Kimco [Realty Corp.] out of any deal,” Taylor said.
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