Monday, April 6, 1998 | 12:48 p.m.
Beefing up its already formidable Las Vegas operation, the Rouse Co. said today it's buying the Fashion Outlet of Las Vegas shopping center under construction in Primm.
Rouse, of Columbia, Md., is buying the 390,000-square-feet Primm development from TrizecHahn Corp. of Toronto. Opening in July, its tenants will include Last Call from Neiman Marcus, Williams-Sonoma, St. John Knits, El Portal and LaCoste. The development is aimed at luring shoppers from the 13 million vehicles passing Primm annually on I-15, which links Las Vegas and Southern California.
Rouse, 75 percent owner of the Fashion Show mall on the Las Vegas Strip, also is buying TrizecHahn's 25 percent interest in Fashion Show. The 840,000-square-feet mall is to be expanded beginning this year to include two new anchors, another 200,000 square feet for small shops and up to 150,000 square feet for entertainment.
Rouse owns the Howard Hughes Corp., developer of the Summerlin master planned community as well as extensive commercial real estate developments in Las Vegas. On top of all that, Rouse plans a regional mall in Summerlin.
Not included in today's deal is TrizecHahn's Desert Passage, the 462,000-square-feet retail-entertainment center planned for the Aladdin hotel-casino when that resort is redeveloped over the next few years. Rouse officials didn't immediately comment on why they didn't buy the Aladdin retail project.
The Las Vegas developments are part of a deal in which TrizecHahn, taking advantage of the lofty prices being paid for high-end shopping malls, agreed to sell its retail property holdings to Rouse and Westfield America Inc. for $2.55 billion.
The sale will net Toronto-based TrizecHahn $1.2 billion after the retirement of debt, giving it more cash to fuel one of North America's most aggressive office and entertainment property acquisition and development programs.
The sale "furthers our strategic initiative to redeploy capital to our office acquisition as well as development activities," said Gregory Wilkins, president and chief executive.
TrizecHahn's shares rose 11/16 to 24 1/2 in morning trading on the New York Stock Exchange.
The 20 properties contain about 19 million square feet of space and are some of the best performing malls in the U.S., including Bridgewater Commons in Bridgewater, New Jersey, Fashion Show in Las Vegas and Park Meadows in Denver.
Collectively, the malls generate about $366 in sales per square foot, or double the industry average. The sale doesn't include TrizecHahn's retail property development business.
Los Angeles-based Westfield is acquiring 12 malls in California and one in Washington for $1.44 billion, boosting its holdings to 37 centers with 34.2 million square feet of space.
Rouse, developer of such urban festival marketplaces as New York's South Street Seaport and Boston's Faneuil Hall, is buying the remaining seven malls, including Bridgewater Commons and Fashion Show and others in Salt Lake city and Denver, for $1.11 billion.
"TrizecHahn's desire to focus on its office and retail/entertainment development business and Westfield America's interest in expanding its presence on the West Coast created a circumstance where all three companies were able to fulfill their objectives," said Rouse Chairman and Chief Executive Anthony Deering.
Rouse fell 3/16 to 32 1/8. Westfield fell 3/16 to 17 1/2.
The U.S. shopping mall industry is undergoing a rapid consolidation, which is quickly putting the bulk of the nation's top malls in the hands of a few of the biggest operators who have the deep pockets and tenant relationships to weather the slump in retail sales.
This consolidation trend was highlighted in February by Simon DeBartolo Group Inc.'s purchase of Corporate Property Investors Inc. for US$5.78 billion. Analysts estimate that Simon DeBartolo bought Corporate Property Investors for a 25 percent premium to net asset value.
Rouse was one of the final bidders for Corporate Property Investors.
The malls' price was at the high-end of analyst estimates, a function of their high sales per square foot, analysts said. The more sales a mall generates, the higher rents landlords can charge retailers.
TrizecHahn decided to put its retail properties on the sales block shortly after the Corporate Property sale, saying it was approached by several interested parties.
TrizecHahn's focus has been on office properties. It is one of the most aggressive acquirers of offices in North America, spending about US$3.1 billion since late 1995 to take advantage of rapidly rising rent and occupancy rates.
In December, the company bought control of Chicago's Sears Tower, the world's second-tallest building, for $110 million, and bought Bell Canada's commercial real estate properties for US$542 million.
Last week it announced a plan to build a new theater complex in Hollywood to house the annual Oscar awards by the Academy of Motion Pictures Arts and Sciences.
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