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TORRANCE,CA-The Mills Corp. of Arlington, VA has sold a 50% interest in its Del Amo Fashion Center to JPMorgan Fleming Asset Management for $244.5 million. This includes $158 million of allocable joint-venture debt on the property, which the REIT bought for $442 million in June 2003. Mills will remain the managing member of the joint venture that owns the mall and will receive development, leasing and property-management fees.

When Mills acquired the center, it revealed plans to revitalize the northeast wing of the property into an open-air lifestyle/entertainment area. It won approval from the Torrance City Council earlier this year for the repositioning and redevelopment plan, which will add about 500,000 sf to the shopping center, and it plans to complete the revitalization with Morgan as its partner. The revitalization includes a new AMC movie-theater complex, a day spa, a variety of upscale restaurants and a gourmet food market. Additionally, the joint venture is exploring possible uses for a 16-acre land parcel at the site. Mills will manage all aspects of the redevelopment process, which will include the already-started demolition of the vacant northeast wing, with JPMorgan Fleming and Mills to share in the cost of the revitalization.

Selling the 50% stake to JPMorgan will enable Mills to pull capital out of the Del Amo property while retaining upside through the redevelopment, according to Mills president Mark Ettenger. Earlier this year, the REIT entered into another joint venture with JPMorgan Fleming as co-owner of the Ontario Mills in Ontario.

JPMorgan Fleming was attracted to the Del Amo deal by both its performance and its potential, according to Sheryl Crosland, head of retail asset management for the JPMorgan. She cites the property’s in-line sales of more than $400 per sf and “some of the most productive department stores in Los Angeles County.”

The Del Amo center ranks among the three largest malls in the US, according to the International Council of Shopping Centers. It is anchored by Macy’s, Macy’s Home and Furniture Gallery, Robinson-May, JCPenney and Sears.

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