NEW YORK — It may not have the most chips at the table, but CBL & Assoc. Properties Inc. played well with a full house in 2004. The Chattanooga, Tenn.-based real estate investment trust, which owns market-dominant regional malls in small cities like Myrtle Beach, S.C., or larger ones such as Cincinnati, had the highest occupancy rate of the major mall REITs in the country, followed closely by Australian-based Westfield Group.
Seven of the eight top REITs hd occupancy rates above 90 percent, which is higher than historical levels.
High occupancy can be interpreted in any number of ways. More tenants paying rent and earning money on CBL’s malls is a plus for the REIT, but if the retailers have locked in below-market rents or have a low sales level, that high occupancy can be a detriment to growth for the owner.
The REIT with the lowest occupancy at the end of 2004, for example, still sported the highest average sales per square foot and collected the highest average rent per square foot. Taubman Centers Inc., once an acquisition target for Simon Property Group and Westfield, earned more than $150 more per square foot than CBL, but its portfolio was only 89.6 percent occupied.
The next top performers according to sales per square foot were Simon, General Growth Properties Inc., and Westfield, which reported $427, $410 and $405, respectively. The retail giants Simon and General Growth provided one of the bigger surprises in year-end numbers. Simon, long cited as the biggest mall owner in the country by both square footage and number of properties, was surpassed last year by Chicago-based General Growth.
The company’s massive $12.6 billion acquisition of The Rouse Co. in late 2004 added 37 regional malls and nearly 40 million square feet of retail to its portfolio, which now tops 200 million square feet. It owns more than 200 properties.
Simon, which acquired Chelsea Property Group in 2004, also substantially grew its retail portfolio, but unlike its major competitor, it used its acquisition to expand into a new business line: premium outlet centers. Simon is currently seeking synergies between its regional mall business and its outlet business, canvassing retailers interested in both property types.
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Glimcher Realty Trust, on the other hand, narrowed its business lines in 2004 as part of an effort to focus on its mall portfolio. It sold the majority of its community centers and has plans to spend more than $60 million in improvements to its existing mall portfolio this year. It currently owns 21.8 million square feet of mall retail nationally.
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