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CHICAGO-With a limited number of regional malls on the market, and at capitalization rates in the 5% for the best shopping centers that do hit the market, General Growth Properties Inc. is looking internally to grow its portfolio. The retail REIT's development and redevelopment pipeline includes $2 billion in projects through 2009, company officials noted Wednesday during their earnings conference call.

Pursuing an opportunity it saw last spring following the merger of Federated Department Stores and May Co., General Growth Properties is talking with the former about buying back a handful of anchor properties with an eye to converting the space to mixed-use or lifestyle retail space, reported chief operating officer Robert Michaels. Some of the redundant Federated and May spaces at General Growth Properties already has been leased to other retailers, he noted.

In addition, the company has acquired six former Mervyn's stores and plans to talk to that chain about other locations, Michaels added. Lord & Taylor locations also may be in play, he suggested. "The inventory is large, and a lot of these present new opportunities for us," Michaels said. "We feel we can do a lot better with that space."

General Growth Properties has $709.3 million in 20 redevelopment and expansion projects, led by the $170.1-million mixed-use project at Victoria Ward Centers in Honolulu, expected to be completed by the end of 2007. In addition, the REIT is building seven developments totaling $1.3 billion, led by the $600 million it has committed to pay for the Shoppes of Palazzo, part of the expansion of the Venetian hotel. Closer to home, General Growth Properties is spending $41.7 million in the north suburbs building Lincolnshire Commons.

By comparison, General Growth Properties acquired just one property last year, the 105,715-sf Whalers Village in Lahaina, HI for $170 million.

Instant Insights /

GGP Looks To Expand $2B Pipeline With Department Store Sites

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