The Macerich Company is selling interests in eight of its properties raising $2.3 billion by forming joint ventures with GIC, is a global investment firm based in Singapore, and Heitman, a Chicago-based global real estate investment management firm.
GIC will have a 40 percent interest in five assets and Heitman will have a 49 percent interest in three assets. The transactions are subject to usual closing conditions and are expected to close in phases starting in October and concluding in the first quarter of 2016.
The joint venture assets are Arrowhead Towne Center in Glendale, Ariz.; Deptford Mall in Deptford, N.J.; FlatIron Crossing in Broomfield, Colo.; Lakewood Center in Cerritos, Calif.; South Plains Mall in Lubbock, Tex.; Twenty Ninth Street in Boulder, Colo., and Washington Square in Portland, Ore.
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Macerich plans to use the proceeds for share repurchases under the company’s just announced $1.2 billion share repurchase program, to pay down a line of credit debt balance, and for a special dividend in the range of $3.50 to $4.50 per share.
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Macerich plans to put financing on South Plains Mall and Twenty Ninth Street Mall and will refinance the debt on Washington Square, Los Cerritos Center and Arrowhead Towne Center. Included in the total cash proceeds is Macerich’s share of the excess financing proceeds which is estimated to be $1.14 billion.
Arthur Coppola, chairman and chief executive officer of Macerich, said, “We are pleased to have entered into these transactions with two very well-regarded investment partners on this cross-section of assets from the Macerich portfolio. The expansion of our long-standing relationship with leading real estate investment management specialist Heitman and the beginning of a new one with GIC, one of the world’s premier global investment funds, validates the strength of the Macerich operating platform and demonstrates the demand for high-quality regional mall assets, while also providing the company with significant capital to create additional shareholder value. These transactions highlight the significant differential between the private and public markets valuation of our assets. Liquidity from these transactions will be used to bridge that gap.” Macerich currently owns 55 million square feet of real estate consisting primarily of interests in 51 regional shopping centers.
Lee Kok Sun, regional head for Americas, GIC Real Estate, said, “We expect these high-quality assets to continue generating steady income streams and are confident of their growth moving forward.”
Maury R. Tognarelli, ceo of Heitman, stated, “We are pleased to expand our relationship with Macerich, one of North America’s preeminent owners of shopping centers and a trusted partner we have been working alongside to successfully accomplish our mutual objectives for over 25 years.”