(Bloomberg)—Global shopping-mall owner Unibail-Rodamco-Westfield is in talks to sell a property in Florida as it prepares a “radical reduction” of its US holdings.
Pacific Retail Capital is proposing to buy the Westfield Brandon Mall near Tampa. Terms of a deal, which may not materialize, are still under negotiation. Chief Executive Officer Steve Plenge said the firm would offer about $200 million, based on a projected 9% to 10% annual return on the investment.
“We’re very interested in that property,” said Plenge, whose firm owns 25 shopping centers valued at about $3 billion. “The most important thing, we think, is that the cost basis would be attractive.”
A representative for Paris-based Unibail-Rodamco-Westfield declined to comment.
The company is positioned for a “radical reduction of our financial exposure to the US over the course of 2022 and 2023,” CEO Jean-Marie Tritant said during a March 30 call with investors. Previous plans to sell some of its 24 US properties had been delayed by the pandemic and weak investor appetites for malls as they lost market share to e-commerce.
While the market for retail real estate has shown signs of a recovery, the outlook for bigger gains is clouded by rising interest rates and inflation hitting consumer spending. Retail-property prices climbed 18.4% in the year through April, “the third month in a row of slightly waning growth,” Real Capital Analytics reported.
Pacific Retail, which specializes in remodeling or repurposing underperforming shopping centers, is attracted to the Westfield Brandon mall because of the Tampa area’s growing population and the potential to redevelop a vacant former Sears store on the site into apartments, Plenge said.
“Where Brandon is located: Very good growth, very little competition,” he said. “We think the asset is on a really good trajectory.”
URW’s plans to sell off its US assets have caused alarm for debt investors concerned that, without strong demand for malls, the landlord may turn over some centers to lenders instead of repaying its loans. About $3.4 billion in mortgages on URW malls have been bundled into bonds and sold to investors, and money managers in some cases could face losses if the company walks away from more properties, Barclays Plc strategists warned last month.
URW has already surrendered three financially troubled malls in Florida in the past year: Westfield Sarasota, Westfield Citrus Park and Westfield Siesta Key. The Brandon property is debt-free, according to Plenge.
Early this year, URW found a buyer for one of its US properties. A firm owned by Stan Kroenke, owner of the National Football League’s Rams, paid $150 million for the site of a shuttered mall in Los Angeles.
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