TrizecHahn to Sell 20 Shopping Centers to REITs
Toronto-based real estate giant TrizecHahn Corp. said Monday that it will sell its interest in 20 U.S. shopping malls to two U.S. real estate investment trusts--including Los Angeles-based Westfield America Inc.--in a $2.54-billion deal.
The sale of the shopping centers--which include Fox Hills Mall in Culver City and Horton Plaza in San Diego--to Westfield and Rouse Co. marks a major exit by Canada’s largest real estate company from the U.S. retail sector.
The sale would not include projects under development, including the $350-million “Hollywood and Highland” complex, which the company announced last week would be the site of the Academy Awards beginning in 2001.
“What we see is an opportunity to now take that capital and redeploy it on the office side, where we are more of an industry leader,” said Tabb Davis, a spokeswoman for TrizecHahn, which expects to net $1.2 billion from the sale after paying off some debt.
Analysts said the sale would be a positive move for TrizecHahn in that it would be exiting the more mature retail market in favor of higher-yielding office properties. The company also was praised for getting a good price for the malls.
“It’s a fantastic price, especially when you consider that a portion of the properties had land leases underneath them, which reduced the value,” said Frank Mayer, a real estate analyst with HSBC James Capel Canada.
Most of TrizecHahn’s U.S. shopping centers will be split between the two buyers, with Westfield paying $1.44 billion for 13 West Coast properties and Rouse $1.1 billion for the remaining seven, which are scattered across the U.S.
In New York Stock Exchange trading Monday, TrizecHahn shares closed at $24.19, up 38 cents, and Rouse at $32.81, up 50 cents; Westfield shares closed at $17.31, down 38 cents.
Westfield--which is controlled by Westfield Holdings Ltd., an Australian shopping center developer and operator--stands to dramatically expand its current inventory of 24 shopping centers through the acquisition. Westfield’s existing portfolio of L.A.-area properties includes Eagle Rock Plaza and Eastland Shopping Center.
Besides Fox Hills Mall and Horton Plaza, the TrizecHahn properties Westfield will buy include Los Cerritos Center in Cerritos, Santa Anita Fashion Park in Arcadia and University Town Center in La Jolla.
“This transaction provides Westfield America with an enhanced strategic position in California, and the portfolio offers us numerous marketing, leasing expansion and growth opportunities,” Westfield President Peter Lowy said in a statement.
TrizecHahn’s empire of U.S. shopping centers is based on the retail properties built by the late Ernest W. Hahn, a prominent developer of suburban Southern California malls.
Hahn’s firm, which built its first regional mall in Santa Barbara in 1967, was sold to TrizecHahn’s forerunner--Trizec Ltd.--in 1980 for $267 million. Hahn remained chairman of San Diego-based Hahn Co.--which ran Trizec’s U.S. operations--until his death in 1992.
After the deal closes, TrizecHahn would be left with three shopping centers in the U.S., along with several major office properties and retail projects under development or renovation.
In Southern California, TrizecHahn will keep ownership of such major properties as Citicorp Plaza in downtown Los Aneles, Plaza Pasadena in Pasadena and a center in Palm Desert.
