Rouse Properties Takes 2 Malls Totaling 2 MSF for $293M
- Dec 13, 2013
With the stroke of a pen, Rouse Properties adds roughly 2 million square feet to its portfolio through the acquisition of Chesterfield Towne Center in Richmond, Va., and The Centre at Salisbury in Salisbury, Md. The shopping mall REIT acquired the assets from affiliates of The Macerich Co. for a lump sum of $292.5 million.
The transaction marks the first time in 20 years that the properties have changed hands. Macerich purchased the 1 million-square-foot Chesterfield in 1994, when it was just 600,000 square feet, for $84.5 million. It added the 862,000-square-foot Salisbury to its holdings a year later for $78 million. Macerich’s off-market sale of Chesterfield and Salisbury to Rouse included Rouse’s assumption of existing debt consisting of a respective $109.7 million non-recourse loan and a $115 million partial-recourse loan.
Dominant, middle-market regional malls are the focus of Rouse’s portfolio, and the REIT’s two recent acquisitions fit the bill. They are both located in “expansive trade areas with limited enclosed mall competition”, Rouse CEO Andrew Silberfein noted in a prepared statement. Chesterfield, developed in 1975 and most recently renovated in 2008, sits in a high-growth submarket in one of the most affluent areas of Richmond. The property is presently 88.1 percent leased, so there’s more work to be done there than at Salisbury, which is presently 93.8 percent leased. Salisbury, located just 10 miles south of the Delaware border, boasts the distinction of being the only enclosed mall within a 55 mile radius. The property made its debut in 1990 and was last upgraded in 2010.
With the purchase of the two malls, Rouse not only increased the square footage of its portfolio, it added new territory; the properties mark the REIT’s entrée into Virginia and Maryland, giving it a presence in 21 states. And it won’t end there.
“As we’ve said, we believe that we’re one of the few companies with the size, established operating platform, retailer relationships, and balance sheet strength, necessary to successfully operate middle-market malls on a national basis,” Silberfein said during the company’s third quarter earnings call in November. “We continue to pursue further opportunities to grow and expect that we will see additional properties for sale from other public REITs such as Macerich.”