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PHOENIX-Feldman Mall Properties Inc. plans to acquire $150 million to $175 million of regional mall properties before this year ends.
"We have an active and vibrant acquisitions pipeline," Larry Feldman, the REIT's CEO, said during yesterday's fourth quarter earnings call. "We will do one or more acquisitions during the second quarter of 2005. We're very confident that we're going to hit our acquisitions target this year."
The REIT, which has an office in Great Neck, NY in addition to the Valley, has spent $170 million on acquisitions since its IPO launched in December 2004: $82.2 million for Colonie Center Mall in Albany, NY and $93.1 million for Stratford Square Mall in Bloomingdale, IL. Another $20 million to $25 million has been earmarked for rehabbing both assets. Feldman currently owns four malls with 4.1 million sf.
According to Feldman CFO Thomas Wirth, the REIT will leverage the acquisitions plan by mortgaging Colonie Center Mall. "We're going to go with three-year, floating-rate debt with a loan-to-cost of 70% or more," he said, answering Wall Street's questions about the REIT's available capital.
The REIT would need to have a "capital event" such as a joint venture or sale to fund any acquisitions beyond the anticipated $150 million to $175 million expenditure, Feldman said, adding Foothills Mall in Tucson, in particular, is ripe for acquisition. "The stage is set for a capital event later this year or early next year," he predicted.
Foothills Mall posted a 17% increase in shop sales in fourth quarter 2004 compared to the same period last year. The gain helped ease the pain from a $1 per sf drop in 2004's average annual comparable shop sales from the previous year when the mall's barometer registered $291 per sf.
According to Feldman, Foothills Mall is in the advanced stage of redevelopment and expected to reach 90% occupancy by the end of this year. The mall currently is 74.6% leased, with about 11,000 sf of leases out for signature, he said.
Similarly, Feldman's Harrisburg Mall in Harrisburg, PA reported an uptick of 15% in December sales following a grand re-opening. After the Bass Pro Shop opened, 115,000 people visited the mall in a four-day period. The Harrisburg mall posted $243 per sf in average comparable shop sales, up $4 per sf from the previous year.
The REIT owns 25% interest in the Harrisburg mall, but has the option to purchase the balance. Feldman declined to say if the REIT would take that step. "We have until July to decide," he said.
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