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SPRINGFIELD, PA-Pennsylvania Real Estate Investment Trust and Simon Property Group, through its Kravco Simon Investments' affiliate, have formed a JV to acquire Springfield Mall for approximately $103.5 million, or just over $175 per sf. Each partner will have a 50% ownership stake in the 590,000-sf mall, which is located about 10 miles southwest of Philadelphia.

This is the third property owned in joint venture between Philadelphia-based PREIT and Indianapolis-based Simon, according to Nurit Yaron, VP of investor relations for PREIT. The others are Lehigh Valley Mall and Whitehall Mall, both in the Allentown area. A spokesman for Simon also tells GlobeSt.com that such a joint venture "is not uncommon. We have many JVs."

Springfield Mall was built in 1974 according to Yaron. "It's in a great location, and we have two small properties in the area." Macy's and Strawbridge's currently anchor, but the Strawbridge's will be closed by Federated in 2006, following the holiday season and post-holiday liquidations. This Strawbridge's unit joins others scheduled for closing at PREIT's Cherry Hill Mall and Willow Grove Park. Both are also anchored by Macy's. Srawbridge's at five additional PREIT centers will be converted to Macy's.

Springfield Mall is now 95% occupied, and, according to PREIT, the sales per sf among tenants for the trailing 12 months is $370 per sf. Among the more than 70 in-line tenants are Ann Taylor Loft, Build-A-Bear, Carrabba's, Charlotte Russe, Gap/Gap Kids, Ruby Tuesday and Yankee Candle.

The buyers expect to obtain a mortgage to finance up to 75% of the acquisition and each expects to fund its remaining respective portion with its own unsecured revolving credit facility. The transaction is expected to close this fourth quarter. The seller, according to Yaron, is a private company she declined to identify.

The price, according to a mid-year report from the Philadelphia office of Marcus & Millichap, is above the median of $150 per sf for multi-tenant assets in the Greater Philadelphia MSA, but below the $208 per sf paid earlier this year for a six-property portfolio of grocery-anchored assets in three area submarkets. The Simon spokesman says Springfield Mall will be subject to Simon's "asset intensification" program. "That includes tenant analysis and an evaluation of how we can wring as much possible value from our properties. No details regarding an investment in this center have been developed," he says.

Instant Insights /

PREIT/Kravco Simon JV Takes Springfield Mall for $104M

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