General Growth, Pensions Pay $276M for Malls

CHICAGO-Present and future pensioners in two states have seen another 3.2 million sf added to their portfolios. General Growth Properties Inc. has acquired three malls in Kentucky and the Houston market in joint ventures with state pension funds here and in New York, paying $276 million.

The malls generate about $24 million in net operating income, according to the No. 2 retail REIT in the US, meaning the properties were acquired at a combined 8.7% overall capitalization rate.

A 50/50 joint venture with the New York State Common Retirement Fund acquired the remaining 50% interest in 1.2-million-sf The Woodlands Mall in Houston, where sales run about $400 per sf. Dillard’s, Foley’s, JCPenney, Mervyn’s and Sears anchor the mall, which was 96% occupied when The Woodlands Commercial Property Company, LP sold its 50% interest.

Another joint venture with the New York State Common Retirement Fund will close on the 1-million-sf First Colony Mall in Sugar Land, TX before the end of the month. Sales there are $358 per sf. Anchored by Dillard’s, Foley’s, JCPenney and Mervyn’s, occupancy is about 91%.

The Teachers Retirement System of Illinois is the 50/50 partner with General Growth Properties in the acquisition of 1-million-sf Florence Mall in Florence, KY. Sales are $357 at the 92% occupied mall, anchored by Sears, JCPenney, Lazarus and Lazarus Home Store.

General Growth Properties had more extensive knowledge about Florence and First Colony malls, as its property management subsidiary has overseen operations there.