The new regional mall REIT Rouse Properties made news last week with its first acquisition as an independent company. The REIT bought Grand Traverse Mall, a 589,000-sq.-ft. enclosed regional mall in Grand Traverse, Mich., a class-B property that happens to be the only regional mall within a 100-mile radius.
Focusing on such assets should allow the REIT to amass a sizeable portfolio quickly, given most REITs’ desire to dispose of non-core assets, says Cedrik Lachance, managing director with Green Street Advisors, a Newport Beach, Calif.-based independent research and consulting firm. But it carries a significant risk if the economy continues to grow at its current sluggish pace, he and other research analysts note.
“Maybe if I had to buy five REITs, Rouse would be on that list,” says Todd Sullivan, a Massachusetts-based investor and author of the Value Plays blog. “But if I had to buy only one, I would rather own GGP.”
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