Columbia-based mall operator Rouse Co. announced yesterday it has sold six properties and acquired half of another, as the company tries to rid its portfolio of older malls.
The firm sold five regional malls and an "urban marketplace" in Pennsylvania and New Jersey to Pennsylvania Real Estate Investment Trust for $548 million in cash. Rouse said that it has also acquired 50 percent control in the Christiana Mall in Newark, Del., from New Castle Associates for $200 million, including assumed debt.
Yesterday's deals are the latest in the firm's shift away from smaller malls with middlebrow retailers, space starting to show its age, and only one or two "anchor" department stores. The company is attempting to fashion itself as an owner of the biggest malls in prime suburban locations that appeal more to Nordstrom shoppers than the J.C. Penney set.
In the past decade, the firm has sold all or part of 40 older malls and bought 16 newer malls.
"Our experience," said Rouse spokesman David Tripp, "has been that those kinds of centers tend to get the highest rents, the highest occupancies, and even when specialty retailers get in trouble, they want to keep their stores doing the highest volumes open, which is in the centers with the most traffic."
The malls Rouse sold had average sales per square foot of $328 in 2002 and were, on average, 90 percent occupied. The Christiana Mall had sales of $606 per square foot and was more than 97 percent occupied.
The buying and selling by Rouse comes amid a tough environment for mall developers. Many analysts believe that demand for malls is mostly satiated in major U.S. markets, and some consumers are shifting to other places to shop, including big box stores such as Wal-Mart and outdoor shopping areas with an urban feel.
Rouse executives and some analysts believe that focusing on high-end properties is the best way to keep business up in a crowded marketplace, as shoppers, with numerous options, pick only the nicest places to do their buying.
"They're focusing on upscale luxury shopping," said David M. Fick, an analyst with Legg Mason Wood Walker. "We think it's a good strategy, because it's giving them one of the top portfolios in sales productivity."