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LAKEWOOD, NJ-The Lightstone Group has acquired two regional malls in the South from Birmingham, AL-based Colonial Properties Trust for $170 million. Lightstone executives first gave GSR preliminary details about the deal in May.

The two centers are the 1.4 million-sf Colonial Mall Macon (GA) and the 415,000-sf Colonial Mall Burlington (NC). Lightstone officials say they will upgrade the tenants at both centers and make other improvements.

Belk, Dillard’s, J.C. Penney, Matthews, Parisian and Sears anchor Colonial Mall Macon. The two-story center has 200 specialty stores and opened in 1969.

Belk, Goody’s, J.C. Penney and Sears are Colonial Mall Burlington’s anchor tenants. Colonial completed a renovation of that property last year.

Locally based Lightstone, which owns a portfolio of 12 traditional regional malls and the 33-property Prime Retail outlet portfolio, has been adding high-end outlet tenants that have a presence in the Prime centers to its malls. (Lightstone acquired Prime in late 2003 for $626.5 million.) “On the outlet side, we have almost every brand in the nation,” David Lichtenstein, Lightstone’s chairman, tells GSR. “It gives us access. We have a big well to dig down into.” Lichtenstein stressed that Lightstone’s strategy is to acquire often-overlooked class B regional malls for value-added renovations.

The last regional mall transaction announced by Lightstone executives was in February, when the firm bought Dakota Square Mall, in Minot, ND, for $55.1 million. On the outlet side, Lichtenstein told GSR in October that the company planned to acquire 15 more regional malls for its portfolio as well as build one-to-two outlet centers a year.

Colonial is using the proceeds from the deal to reduce the borrowings from its unsecured line of credit and bolster its open-air center development pipeline. The company currently has four open-air developments planned around the South and executives most recently announced the $60 million, 350,000-sf Pinnacle at Sumner Point, in the Nashville, TN, suburbs, which is scheduled to open in the fall of 2006. Since last year, Colonial has sold its interests in five malls. It currently owns 12 malls and 31 open-air centers.

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