Colonial Malls Could Command Up to $330M, Analyst Report Says

BIRMINGHAM, AL-Colonial Properties Trust has put six Southeastern malls, totaling about 3.5 million sf, on the market, and the centers could fetch between $290 million and $330 million, according to a Morgan Stanley report released yesterday. Colonial says it expects to complete a transaction by next year’s first quarter and will use the proceeds to acquire more assets.The malls are the 1.4-million-sf Colonial Mall Macon (GA); the 555,000-sf Colonial Mall Temple (TX); the 517,000-sf Colonial Mall Gadsden (AL); the 423,000-sf Colonial Mall Staunton (VA); the 415,000-sf Colonial Mall Burlington (NC); and the 206,000-sf Colonial Mall Mayberry, Mount Airy, NC. Colonial has a total of about 16 million sf of retail in its portfolio, as well as 22,400 apartment units and 6.8 million sf of office space.”Given the activity in the mall sector, it should be an interesting opportunity for both the public REITs and the private buyers,” says Arthur M. Milston, managing director at Granite Partners, the firm marketing the properties. “We will sell them as a portfolio, sub-portfolio or as individual properties.”Milston would not speculate how much the malls would sell for. The centers each have sales per sf between $275 and $350, he says, and their anchor tenants include Belk, JCPenney and Sears, Roebuck & Co.If all six malls are sold it would leave the company with 11 in its portfolio. Colonial also owns 26 open-air centers, and the company’s strategy is to build and buy more of those properties and reduce its exposure to malls, says company spokeswoman Linda Geiss. On Sept. 20 the company acquired the 221,000-sf Boulevard Square open-air center in Fort Lauderdale, FL, which it is renaming Colonial Promenade Boulevard Square. The company also plans to open Colonial Pinnacle at Craft Farms, a 285,000-sf lifestyle center in Gulf Shores, AL. In August, Colonial acquired three open-air centers in southern Florida.Morgan Stanley predicts that CBL & Associates, Glimcher Realty Trust and Pennsylvania Real Estate Investment Trust are potential suitors for the malls. The firm says the highest quality mall in the portfolio is the Macon center.