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Simon-Macerich buy 12 IBM malls

Simon DeBartolo Group and The Macerich Co. ended 1997 with a bang, announcing Dec. 29 they had formed a 50/50 joint venture to acquire a portfolio of 12 regional malls owned by the International Business Machine Corp.'s pension fund.

The price was $974.5 million, including the assumption of $485 million of debt.

The sale was handled by ERE Yarmouh, New York, which has been the portfolio's asset manager. The properties in the portfolio comprise 10.7 million square feet of gross leaseable area, with occupancy at about 89%. Sales per square foot for the malls were heading for over $260 for 1997.

Four of the malls are in Iowa: the 1 million-square-foot NorthPark Mall, Davenport; the 1 million-square-foot Southridge Mall, Des Moines; the 752,768-square-foot Southern Hills Mall, Sioux City; and the 694,992-square-foot Lindale Mall, Cedar Rapids. The others in the portfolio are: the 1.3 million-square-foot Empire Mall, Sioux Falls, S.D.; the 1 million-square-foot Eastland Mall, Evansville, Ind.; the 1 million-square-foot Granite Run Mall, Media, Pa.; the 1 million-square-foot SouthPark Mall, Moline, Ill.; the 850,370-square-foot Mesa Mall, Grand Junction, Colo.; the 828,995-square-foot Rushmore Mall, Rapid City, S.D.; the 560,324-square-foot Lake Square Mall, Leesburg, Fla.; and the 482,332-square-foot Valley Mall, Harrisonburg, Va.

The deal marks the first venture between Indianapolis-based Simon and Macerich, Santa Monica, Calif.

"With the geographic diversity of the portfolio, it made sense for us to do it together," said Arthur Coppola, president and CEO of Macerich.

Macerich and Simon each will have day-to-day management duties for six properties, all of which were previously managed by General Growth Properties, Chicago.

"Simon will handle everything east of Des Moines, we'll handle everything to the west, and then we'll each take two properties in Iowa," said Mr. Coppola.

"This transaction adds still another solid collection of strong-performing assets to the SDG portfolio and reinforces our role as the industry's leading consolidator," Simon CEO David Simon stated.

The additional malls are expected to boost the business of Simon Brand Ventures, a mall marketing organization set up last fall.

When reports surfaced several months ago that the IBM mall portfolio was for sale, John Bucksbaum, executive vice president of General Growth Properties, said GGP was interested. Simon also outbid GGP for the $1 billion Retail Properties Trust 12-mall portfolio in October.