New York — The Macerich Co. (NYSE: MAC) has agreed to purchase two malls in the New York metropolitan area — Kings Plaza in Brooklyn and Green Acres Mall in Valley Stream — for $1.25 billion.
"These transactions are consistent with our investment strategy of acquiring assets in the major markets where we have our best assets and selling non-core assets and recycling capital," says Arthur Coppola, chairman and CEO of Macerich, a Santa Monica, Calif.-based retail REIT
Kings Plaza spans 1.2 million square feet and is 95 percent leased to tenants such as Aeropostale, American Eagle, Armani Exchange, Forever 21, H&M, MAC, Pink, Swarovski and Victoria's Secret. Macy's, Lowe's and Sears anchor Kings Plaza, which is the only enclosed super regional mall in Brooklyn. The mall's annual sales production is $650 per square foot.
Macerich is acquiring the mall from a subsidiary of Alexander's Inc. for approximately $751 million. Macerich plans on placing secured debt on the property at the closing of the transaction, which is slated for late 2012. The balance of the purchase will either be funded from cash on hand or Macerich's line of credit.
The 1.8 million-square-foot Green Acres Mall is located on the border of New York City and Nassau County, and serves customers in southeast Queens and southwest Nassau County. The mall is 94 percent leased to tenants such as Aeropostale, American Eagle, Forever 21, H&M and Modell's. Macy's, Macy's Mens, Sears, Kohl's, JC Penney, BJ's Wholesale Club and Walmart anchor the mall. The mall was renovated and expanded in 2007, and the mall's annual sales production exceeds $520 per square foot.
Macerich is acquiring the mall from a subsidiary of Vornado Realty Trust for $500 million, and is expecting to close the transaction in the first quarter of 2013. Similar to the Kings Plaza transaction, Macerich will place secured debt on the mall and the balance will be funded from cash on hand or the company's line of credit.
"This allows us to build on our New York portfolio and will be an excellent complement to Queens Center," says Coppola. Macerich owns Queens Center, the largest mall in Queens. "At Kings Plaza and Green Acres, there are substantial opportunities to replace lower sales producing tenants with higher productivity tenants, in a manner similar to what we accomplished after we acquired Queens Center."
Macerich focuses on the acquisition, leasing, management, development and redevelopment of regional malls throughout the U.S. The company has approximately 64 million square feet of gross leasable retail space in its portfolio, which consists primarily of interests in 62 regional shopping centers.
Macerich's stock price closed at $57.58 per share on Monday, up $48.39 per share this time last year.
— John Nelson