NEW YORK CITY-Macerich Cos., a Santa Monica, CA-based retail REIT with 62 regional shopping centers in its US portfolio, has snatched up two of the largest malls in the New York metropolitan area. According to a statement released Monday morning, the company has acquired the Kings Plaza Mall in Brooklyn and the Green Acres Mall in Valley Stream, NY, for approximately $1.25 billion.
Macerich acquired Kings Plaza from a subsidiary of Alexander’s Inc., a publicly-traded REIT that is one-third owned by Vornado, for a purchase price of $751 million. The mall – anchored by Macy’s, Sears, Best Buy and Lowe’s Home Improvement – is 95% occupied by tenants such as Aeropostale, American Eagle, Armani Exchange, Forever 21, H&M, Swarovski and Victoria’s Secret. The company expects to place secured debt on the property at the closing of the transaction, which is planned to wrap up in late 2012.
In Nassau County, Macerich acquired the Green Acres Mall from a subsidiary of Vornado Realty Trust, for $500 million. The mall – located on the border of New York City – expanded in 2007, and has approximately 408,000 square feet of in-line mall tenant space that includes Modell’s Sporting Goods, H&M and Forever 21. It is 94% occupied, with annual sales per foot of $520 and anchors like Macy’s, Kohl’s, JCPenney, Sears and Old Navy. The deal is expected to close in the first quarter of 2013.
In total, Macerich owns six malls in New York State, with three of them being in the metropolitan area, including Queens Center in Elmhurst, NY; the Shops at Atlas Park in Glendale, NY; and the Cross County Shopping Center in Yonkers, NY. Following the deals, Arthur Coppola, chairman and chief executive officer of Macerich, says the transactions are consistent with the REIT’s investment strategy of acquiring assets in major markets and repositioning them with new tenants, which it plans to do with the two assets. “This allows us to build on our New York portfolio and will be an excellent complement to Queens Center,” he says, in a statement. “At Kings Plaza and Green Acres there are substantial opportunities to replace lower sales producing tenants with higher productivity tenants, in a manner similar to what we accomplished after we acquired Queens Center.”
According to a statement from Alexander’s, net proceeds from the sale will be approximately $481 million after repaying the existing loan and closing costs. The financial statement gain will be approximately $602 million, and the tax gain will be approximately $624 million, which is expected to be paid out to stockholders as a special long-term capital gain dividend.