The mall, located at the intersection of FM 1960 and Texas 249, has been bought Chicago-based General Growth Properties Inc.'s joint venture, GGP/Homart II LLC, with the New York State Common Retirement Fund. The seller is a pension account managed by Lend Lease Real Estate Investments Inc.
The mall had been built in 1981 and remodeled in 1992. It has 423,000 sf of shopping space and is 92.5% occupied. Dillards, Foleys, JCPenney, Lord & Taylor and Sears are the anchors, with sales averaging about $430 per sf. The May Co. is considering setting up shop in a vacant Montgomery Ward store, one of 13 it plans to buy from the bankrupt chain.
William Forrest of Revac Inc., a Houston-based real estate research and valuation company, tells GlobeSt.com that this was a good price for a successful mall. The mall is in a good location and with a good selling price per sf, he says. Forrest notes that the sales per sf are one of the most important factors in assessing a mall's value. Most malls, he says, sell for $100 per sf or more.
Forrest believes the interest rate on the financed portion of the mall probably had helped the sale. The terms call for a 10-year mortgage at 6.93% interest for $102 million. A short-term variable loan price at LIBOR plus 75 basis points has been used to fund the balance of the purchase price. Forrest says interest rates have been in the high sevens and low to mid eights in previous years. In a $100-million plus deal, such a decrease in interest points makes a huge difference, he says.
Last year, the joint venture had upped its stakes in Vista Ridge Mall in Dallas and Buckland Hills Mall in Manchester, CT. Forrest says despite the success of Willowbrook Mall, the mall concept is a "tired" retail them that is on its way out. Forrest believes the success of the big box stores and the fun new looks of modern retail facilities have pushed the mall concept out. Indeed many other Houston malls including Memorial City and Town & Country malls have suffered the loss of major anchor tenants and low sales in recent years.
GGP/Homart is a private REIT formed in December 1995 to buy the Sears, Roebuck & Co. real estate portfolio. The REIT's current holdings consist of four mall joint ventures and one land joint venture.
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