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TrizecHahn says sale 'went perfectly'

In March, San Diego-based TrizecHahn Centers announced that in response to unsolicited bids it would consider selling its existing shopping center portfolio to concentrate its attention -- and the proceeds -- on development activities in the United States, Europe and Asia. On April 6, the firm announced that it would sell 20 of its 25 centers to a joint venture of Westfield America, Los Angeles, and The Rouse Co., Columbia, Md.

In the following articles, the chief executives of the three companies involved in the transaction discuss the background of the deal, and offer their visions for the future, both for their own firms and the shopping center industry.

TrizecHahn Development President Lee H. Wagman, Westfield America Co-Presidents Peter Lowy and Richard Green, and Rouse Chairman and CEO Anthony Deering spoke with SCT Editor Debra Hazel shortly after the deal was announced.

SCT: When you announced that you were considering selling the portfolio, you said it could be six days, six weeks or whenever for a deal. Were you surprised by the timing?

Mr. Wagman: We were very pleased the process worked so well. We organized it this way, and the market responded well. Whenever you put one of these transactions together, you hope it's going to go perfectly, but you never are certain. But this really went perfectly.

You only sold 20 of the 25 centers. What will you do with the others?

The balance are development projects for us and are part of the continuing TrizecHahn Development. This is an unusual transaction for the industry. Normally, when a company has sold its assets, the company disappeared: DeBartolo, Homart, CenterMark, Retail Property Trust. That is very unlike what is happening here. But the company ... [has] the same strategy we always had: to grow through acquisitions, which have been primarily on the office side, and through development, which has primarily been on the retail side. But we are building office buildings, we are building $1.5 billion in development projects, plus the retail.

And a lot of this money will go toward funding a lot of that.

All of this money, we hope, will go into our growth initiatives. That's the idea: to take the money that is growing at one rate and put it into markets where the growth is faster. ... We are ... not operating in a REIT format, which means that we are not obligated to pay out our income as dividends. We have the ability to reinvest it in our projects at a higher rate. ... We have many development initiatives in place: the United States, international, traditional, nontraditional.

Is there sort of a pang letting go of these projects?

It's very emotional. But it's kind of like your children. You conceive them and nurture them and help them reach maturity. And whenever a child goes into the world, you have a sense of separation. And we have much that same sense. ... But I also am happy that they are being picked up by these buyers, who we think will make sure they remain strong in their markets and responsive to community needs.

But we are working in an international arena, retail development, landmark projects in North America and elsewhere. The future is so exciting, whatever sense of separation you might have is brief.

It's almost like the early days of the business in a lot of ways.

Actually, I don't think it's just like the early days. In the old days, people weren't sure where it was going to go. We now have the whole technology to know where we've gone, what's done, but the ability to move in different directions because we're not dragging the past behind us. I hate to say this, but most communities today are not looking for malls. They are not looking for traditional regional malls. They are looking for good retailing, but they are not necessarily looking for malls. We have positioned ourselves with what we've done to build properties we think are much more relevant to people's lives and more interesting.

Do you anticipate there will be much more consolidation in the industry?

Absolutely. I don't know whether the pricing will continue at the same levels, because it will vary from portfolio to portfolio. It will vary based upon general market conditions and the dynamics of the market at the time. But consolidation in the industry is going to continue, from private to public, from small public to large public. It's inevitable.

Do you expect to have 20 or 25 projects again in a few years?

Oh yeah, absolutely. I suspect we will be opening retail projects, and will get to 20 in around four years if you count all the projects we have going, in the United States, Asia and Europe.