GREENWICH, CT-Locally based Starwood Capital Group, has completed, through a controlled affiliate, the acquisition of a majority interest in seven regional malls in the US from the Westfield Group. Westfield will maintain a 10% common equity interest in the properties.
The malls contain 7.9 million square feet of retail space across four states on the West Coast and the Midwest. The sites are all anchored by major national retailers and have an average occupancy of approximately 96%.
As GlobeSt.com previously reported, at 1.36 million square feet, the Westfield Southlake in the Chicago suburb of Merrillville, IN is the largest, followed by the 1.32-million-square-foot Westfield Parkway in El Cajon, CA, a suburb of San Diego.
The other properties include Westfield Franklin Park in Toledo, OH, 1.26 million square feet; Westfield Great Northern in the Cleveland suburb of North Olmsted, OH, 1.18 million square foot; Westfield West Covina in West Covina, CA, 1.18 million square feet; Westfield Belden Village in Canton, OH, 826,140 square feet; and Westfield Capital in Olympia, WA; 779,268 square feet.
The properties will become part of the growing portfolio at Starwood Retail Partners, the wholly owned, fully integrated operating platform that oversees Starwood Capital Group's retail investments. Starwood Retail Partners will perform all property management, leasing and—in conjunction with Starwood Capital Group—asset management functions for the newly acquired properties. The existing onsite management teams will continue to operate the properties under the direction of Starwood Retail Partners.
The acquisition builds on a longstanding relationship between Starwood Capital Group and Westfield, a Sydney-based owner and operator of shopping centers. The two firms completed a similar transaction in June 2012 involving seven leading malls in California, Illinois, Ohio, Nebraska and Florida that helped lead to the formation of Starwood Retail Partners.
“I believe we can build a differentiated company in the retail mall marketplace and are pleased we have reached "critical mass,” says Barry Sternlicht, chairman of Starwood Retail Partners. “We intend for Starwood Retail Partners to be an important new player in this industry, with fresh ideas and collaborative partnerships with tenants and to attract great people talent to power our growing platform.”
Over the past 18 months, according to Scott Wolstein, CEO of Starwood Retail Partners, “we have assembled a portfolio of 19 high-quality regional malls and retail centers with an aggregate purchase price in excess of $3.2 billion. We believe that regional shopping malls offer an attractive value proposition for our partners. We look forward to selectively pursuing new opportunities to expand our portfolio."
This transaction offers investors an opportunity to generate attractive risk-adjusted returns,” adds Jeff Shuster, VP at Starwood Capital Group. “We plan to invest fresh capital across the portfolio to improve the assets, attract new tenants and position the malls to continue to best serve their local communities.”
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
