Starwood Capital Closes $1B Purchase of Seven Westfield Malls

Starwood Capital Group is now 6.6 million square feet larger. The global private investment firm recently wrapped up its acquisition of a 90 percent stake in seven shopping centers from Sydney, Australia's Westfield Group in a transaction valued at just over $1 billion. DDR's Scott Wolstein will spearhead the new division.

Starwood Capital Group is now 6.6 million square feet larger. The global private investment firm recently wrapped up its acquisition of a 90 percent stake in seven shopping centers from Sydney, Australia’s Westfield Group in a transaction valued at just over $1 billion.

The group of assets–which, but for one property that is currently undergoing construction, was 93.8 percent leased as of the close of 2011–is spread out from California to Florida and points in between. Two of the retail destinations, Chicago Ridge and Louis Joliet, are located in Chicago, and another two call California home: Metreon in San Francisco and Solano in the suburban San Francisco city of Fairfield. Westland in Miami is also part of the portfolio. The bulk of the properties are sited in first-tier markets, but secondary markets did not go ignored in the acquisition; the collection also includes Gateway in Lincoln, Neb., and SouthPark in Cleveland.

Westfield, currently engaging in the divestment of non-core U.S. assets as part of a plan to increase return on equity and long-term earnings growth, has not bid adieu to the shopping centers completely; it still holds a 10 percent interest in the portfolio. However, Starwood has taken on the management role and created a new subsidiary, Starwood Retail Partners, to take charge of the assets. Starwood Capital brought in longtime industry player Scott Wolstein, co-founder of leading shopping center owner and manager DDR, to spearhead the new division as CEO.

“We are very excited about the opportunity to bring Starwood’s best-in-class investing and management expertise to the evolving retail space,” Wolstein said. “Shopping centers in the United States are undergoing a transformation, as junior anchors and value retailers are rethinking store size and distribution needs to the benefit of regional malls, including the ones we recently acquired from Westfield. We expect to build on this platform in the years to come.”

Wolstein’s work has already begun, as he now oversees activities of CBL & Associates Properties Inc., which is onboard to provide six of the assets with management services ranging from accounting to marketing to maintenance.