Mills, Simon Property Add Malls to Portfolios

Two of California’s largest shopping centers are changing hands as big investors continue to flock to one of the best-performing sectors of the commercial real estate market.

Virginia-based Mills Corp. said Tuesday that it completed the previously reported acquisition of the Del Amo Fashion Center in Torrance for $442 million.

Del Amo, at 2.5 million square feet one of the five largest malls in the nation, was sold by Los Angeles developer Guilford Glazer, who last year was ranked by Forbes magazine as one of America’s 400 wealthiest people with a net worth of $700 million. Glazer built the mall in 1971.

The shopping center is anchored by Macy’s, Sears, JCPenney and Robinsons-May and generates annual sales per square foot of $400, which is 19% higher than the industry average of $335.

Mills, which owns 24 shopping and entertainment centers including Ontario Mills and the Block at Orange, plans to spend $160 million to upgrade Del Amo and increase its size by 100,000 square feet.

Mills may add more anchor stores and “big box” retailers, as well as an entertainment component and apartments or condominiums, said Jim Dausch, Mills’ president of development.

A 400,000-square-foot wing of the mall is vacant in anticipation of redevelopment.

Shares of Mills rose 22 cents to $33.77 in New York Stock Exchange trading Tuesday.

In Northern California, Simon Property Group said it would acquire the Stanford Shopping Center for $333 million.

The Palo Alto mall encompasses 1.3 million square feet and is anchored by five department stores: Neiman Marcus, Nordstrom, Bloomingdale’s, Macy’s and Macy’s Men’s Store.

Stanford University, which owns the mall, developed the property in phases beginning in 1956.

Revenue from the center, which generated $500 million in sales last year, supports the university’s teaching and research.

The mall will continue to hold a long-term ground lease, said Les Morris, a spokesman at Indianapolis-based Simon Property, the nation’s largest mall owner. The company expects the sale to be completed early next month.

Simon Property owns 238 parcels comprising 182 million square feet including the Mall of America in Minnesota, the largest in the U.S.

In the San Francisco Bay Area, Simon Property also owns Santa Rosa Plaza.

Simon Property’s shares rose 42 cents to $39.45 on the NYSE.