GGP Eyes Department Store Sites

CHICAGO-With a limited number of regional malls on the market, and at capitalization rates in the 5% for the best shopping centers that do hit the market, General Growth Properties Inc. is looking internally to grow its portfolio. The retail REIT’s development and redevelopment pipeline includes $2 billion in projects through 2009, company officials noted Wednesday during their earnings conference call.

Pursuing an opportunity it saw last spring following the merger of Federated Department Stores and May Co., General Growth Properties is talking with the former about buying back a handful of anchor properties with an eye to converting the space to mixed-use or lifestyle retail space, reports chief operating officer Robert Michaels. Some of the redundant Federated and May spaces at General Growth Properties already has been leased to other retailers, he notes.

In addition, the company has acquired six former Mervyn’s stores and plans to talk to that chain about other locations, Michaels adds. Lord & Taylor locations also may be in play, he suggests. “The inventory is large, and a lot of these present new opportunities for us,” Michaels says. “We feel we can do a lot better with that space.”