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PARAMUS, NJ-Westfield America and an affiliate of Britain’s Prudential plc have signed a letter of intent for the latter to buy at least a 25% share of the former’s Garden State Plaza here. Options to the agreement mean that the Pru affiliate could end up owning as much as 50% of the two million-sf mall, a regional shopping landmark.

The deal, pending due diligence, is set up thusly: The Prudential plc affiliate will pay $193.8 for the 25% share, including $61.7 million in cash, an unleveraged interest acquired by Westfield America in a California shopping center, and assumption of $65 million in mortgage debt on Garden State Plaza. The agreement also carries options for another 15% interest to be acquired for more than $116 million between May 2004 and May 2005, and an additional 10% to be acquired for $77.5 million.

The same letter of intent calls for the Los Angeles-based Westfield America, owned by Australia’s Westfield Holdings, to buy a 50% share in Fashion Square Sherman Oaks in Los Angeles from the Pru affiliate for $67 million. Regarding the two transactions, Westfield managing director Peter Lowy says he is “pleased with the opportunity to joint venture with Prudential plc. This fits well with our growth and clustering strategy and provides outstanding market synergies.

Originally built in 1957, the massive Garden State Plaza is anchored by Nordstrom, Macy’s, JCPenney, Neiman Marcus and Lord & Taylor. Westfield acquired a 50% share of it in 1986, expanded it dramatically in 1996 and bought the rest of it earlier this year from Rodamco North America. The latter deal was part of the Rodamco’s fire sale, which saw Westfield, Simon Property Group and The Rouse Co. divide up its massive holdings for a reported $5.3 billion.

Even with the sale of as much as 50% of Garden State Plaza, “our remaining interest still represents the single largest investment in our US portfolio,” according to Lowy. “And this transaction provides us with additional cash for further expansion in the US.”

Goldman, Sachs & Co. is advising Westfield America in the transaction, and JP Morgan Fleming Asset Management is advising Prudential plc.

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