General Growth Spends $249M at Two Centers

CHICAGO-General Growth Properties has closed two deals this week, buying the 1.2-million-sf Four Seasons Town Centre in Greensboro, NC as well as the 50% interest in the 1.4-million-sf Town East Mall in Mesquite, TX that it did not own. The deals cost the second-largest US retail REIT $249 million.

With $19.2 million in net operating income expected during the next 12 months, the deals were at a capitalization rate of 7.7%. General Growth Properties buys Four Seasons Town Centre from the Koury Corp. with occupancy at 91.1% and sales averaging $345 per sf. London-based Grosvenor Americas Sponsored Partnership sold the remaining 50% interest in Town East Mall, where occupancy stands at 90.2% and sales at $340 per sf.

Dillard’s and JCPenney are anchors at both centers. Built in 1974 and renovated in 2000, Four Seasons Town Centre also includes a Belk’s as an anchor. The 33-year-old Town East Mall, renovated twice in the 1990s, also includes Sears and Foley’s as anchors.

In buying Four Seasons Town Centre, General Growth assumes a $112-million mortgage at 5.6% due in 2013. The REIT also issued $25.1million of convertible preferred operating partnership units paying 7%.

To buy Town East Mall, General Growth assumes a $43.5-million loan tied to Libor, but plans to convert the debt to a fixed-rate loan.

The REIT also took $68.4 million in cash off its balance sheet to swing both deals.

“Four Seasons Town Centre is the premier shopping destination in a growing market and we have an opportunity to build upon the success of a high performing asset,” says General Growth Properties chief executive officer John Bucksbaum. “We are also pleased to increase our ownership in Town East Mall, a key contributor to a strong group of General Growth centers focused on serving the needs of Dallas/Fort Worth shoppers.”