Considered one of the premier retail properties in Florida, the property generated average annual sales of $300 per sf, excluding tenants with leases over 10,000 sf, according to Colonial Properties Trust. The deal is expected to close in the fourth quarter and will be funded from the buyer's unsecured credit facility, according to Ronald Rubin, chairman and CEO of the Philadelphia-based PREIT.
"PREIT has made a $2-million deposit which it will forfeit if it does not close the transaction for any reason other than the failure of the sellers to satisfy certain closing conditions," Rubin says. The transaction has been approved by PREIT's board of trustees but is still subject other customary closing conditions.
Rubin calls the pending acquisition "consistent with our previously stated goal of expanding our presence in the Southeast." He says Orlando "has one of the fastest growing populations in the country and we believe this mall presents an attractive opportunity for PREIT to bring tenants to this market."
Orlando Fashion Square is anchored by Burdines-Macy's, Dillard's, JCPenney and Sears. Among the mall's 100 in-line tenants are American Eagle Outfitters, Ann Taylor Loft, Charlotte Russe, the Children's Place, Express, Finish Line, Hot Topic, New York & Co. and PacSun.
A 41,000-sf Premiere Cinemas stadium seating movie theater is being constructed on the mall's second floor. Completion is expected in second quarter 2005.
"Based on certain assumptions about the opening of the movie theater, the company [PREIT] underwrote the acquisition to generate an unleveraged return of approximately 7.6% on cost, based on anticipated operating income by 2005," Rubin says. The mall is subject to three ground leases which expire in or can be extended to 2092.
Founded in 1960 as one of the first equity REITs in the US, PREIT focuses its investments on shopping centers and power centers in the eastern US. The trust has 52 properties in 12 states totaling 31 million sf. The portfolio includes 35 malls, 13 strip and power centers and four industrial properties.
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