Monday, May 18, 1998 | 10:02 a.m.
A top executive of the company buying two Las Vegas malls will be here next week to begin forming strategies on leasing, marketing and promotional activities for the properties.
Matthew Bucksbaum, chairman of General Growth Properties Inc., a real estate investment trust, said he will meet with management of the Boulevard Mall, acquired last month, and the Meadows Mall, which the company got Thursday as part of a $625 million deal involving six properties.
In the deal announced Thursday, General Growth agreed to buy U.S. Prime Property Inc., which held about 5.9 million square feet of retail space in Las Vegas; Alexandria, Va.; Lancaster, Pa.; and Savannah, Ga.
Under the agreement, Chicago-based General Growth, one of the U.S.'s biggest mall owners, will pay $560 million in cash for U.S. Prime and assume $65 million in debt. U.S. Prime is a private real estate investment trust whose investors are pension funds. It is managed by ERE Yarmouth Inc., a unit of Australia's Lend Lease Corp.
General Growth, a real estate investment trust whose shares are publicly traded, will finance about two-thirds of the purchase through long-term, fixed-rate secured loans, said Chief Financial Officer Bernard Freibaum. General Growth is in talks with an unidentified institutional investor to finance about $100 million of the purchase price, Freibaum said. General Growth will pay the remainder out of cash on hand, he said.
"We're excited about being in Las Vegas where having two properties will give us some synergies in the marketplace," Bucksbaum said. "We hope to create some additional opportunities for retailers."
General Growth also acquired the 1.125 million-square-foot Boulevard -- the city's oldest and largest regional mall -- as part of a package deal. The 19-year-old Meadows Mall has 951,000 square feet and is anchored by Dillard's, J.C. Penney, Sears and Macy's. Both properties have had extensive renovations and additions within the last two years.
While the current trend toward consolidation in retail real estate is common, it's somewhat unusual for a company to have more than one regional mall in a market as small as Las Vegas.
"Like the retailers themselves, it's better if you have more than one outlet," said Kit Graski, who analyzes suburban real estate trends in Las Vegas as first vice president for CB Richard Ellis. "A lot of people have come in and bought multiple properties, but it's more often a mix of power centers and neighborhood centers."
Graski explained that power centers are characterized as a grouping of large retail outlets while neighborhood centers generally are anchored by a supermarket tenant. Pan Pacific and Weingarten Realty Investors are examples of companies that have such multiple outlets in Southern Nevada.
Bucksbaum said owning more than one property would be advantageous for writing leasing agreements and setting up advertising for retailers that have more than one store.
He said the two-mall ownership would be an experiment for the company, although General Growth has owned two regional malls and managed two others in Atlanta for 1 1/2 years. That circumstance is different, he said, since all the malls aren't owned by the company and Atlanta is a larger market than Las Vegas.
Bucksbaum also said he would meet with managers from both local malls when he is in Las Vegas next week for the International Council of Shopping Centers convention. Since his company has a track record of keeping onsite management teams and both malls are good performers, he doesn't expect any major staffing changes.
BLOOMBERG BUSINESS NEWS contributed to this report.