The country’s largest mall owners are focused on growth. Surprisingly, it’s growth focused both outside of traditional malls and the country.
Simon Property Group, the largest retail real estate investment trust, posted a 27.2 percent jump in earnings in the third quarter, to $94.6 million. It also upped the anticipated dollar figure on its development pipeline to $5.3 billion between now and 2010, with most of the domestic projects including the addition of mixed-use elements to existing properties. “The mixed-use opportunities in our portfolio are immense,” said chief executive David Simon. “They take time.” The company is also looking closely at Japan, where Simon hinted the REIT may be opening full-price retail centers soon.
Other retailers are also looking at development opportunities closer to home but perhaps a bit foreign in nature. Taubman Centers’ ongoing partnership with the Church of the Latter Day Saints finally saw the light of day this fall, when the church unveiled its $1 billion plan for the mixed-use City Creek Center in downtown Salt Lake City. Taubman will develop and control the 900,000-square-foot retail element of the project, with exact plans to be announced in 2007, said Robert Taubman, president and chief executive, as the company released quarterly results. Currently, Macy’s and Nordstrom signed on to the project, which is to start demolition this month. Taubman recorded a net loss of $1.4 million in the third quarter.
Some REITs are more focused on shedding properties — and creating more polished portfolios — rather than building projects. For the Macerich Co., this strategy resulted in net income soaring to $47 million in the third quarter from $4 million a year prior. Much of that jump, though, was attributed to the sale of $132 million worth of noncore assets, totaling 1 million square feet of space. The net gains on the sale were $46 million.
CBL & Associates suffered the opposite fate. Net income dropped to $14.3 million in the third quarter from $60.1 million a year prior. The sale of five shopping centers to Galileo America netted the REIT nearly $40 million in one-time gains.
On deck to report third-quarter results this week is Federal Realty Investment Trust and General Growth Properties.