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Deal to Open Up Shopping Malls

Times Staff Writer

Eight Southern California shopping centers will get face-lifts as the result of a deal in which a major mall operator is acquiring Robinsons-May and Macy’s stores from Federated Department Stores Inc.

Westfield Group, the largest owner of shopping centers in California and the world, said Friday that it agreed to acquire 15 stores from Federated, all but three in Southern California. As part of the complex deal, Federated will acquire ownership of 12 stores across the country that it has been leasing from Westfield.

Westfield plans to knock down the buildings at eight of its Southland malls and replace them with shops, restaurants and theaters that can help the centers compete with newer venues such as the Grove in Los Angeles.

The move is part of an industry trend toward creating airy shopping centers that more closely resemble Main Street.

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Westfield plans to spend millions of dollars upgrading malls such as MainPlace in Santa Ana, Plaza Camino Real in Carlsbad and Fox Hills in Culver City, said Peter Lowy, head of U.S. operations for Sydney, Australia-based Westfield.

One or two of the stores may be replaced with new, reconfigured department stores, but most of the new tenants will be smaller specialty retailers. Lowy expects some of the new tenants to announce their plans within two weeks.

Shoppers have shown that they prefer the outdoor sensibility and entertainment aspects of so-called lifestyle centers such as the Grove and Westfield’s Century City mall, said retail industry consultant Aubie Goldenberg of Ernst & Young.

“We’re seeing that trend more and more,” Goldenberg said.

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The agreement allows Federated to unload duplicative locations of Macy’s and Robinson-May stores after its acquisition of St. Louis-based May Department Stores Co.

The transaction involves a swap of 24 store buildings and is expected to close in the second quarter.

In the exchange, Westfield will get 12 store buildings from Federated. In exchange, Federated is getting 12 stores, only two in Westfield-owned malls.

Westfield will buy an additional three stores from Federated for $18.5 million. The values of the traded stores were not disclosed.

The Southern California stores being acquired by Westfield include Macy’s buildings in Escondido, West Covina, La Jolla, Santa Ana and two Macy’s stores in Palm Desert. Westfield also is getting Robinsons-May stores in Culver City, Santa Ana, Escondido, Carlsbad, Arcadia and La Jolla.

Cincinnati-based Federated declined to disclose the locations of stores it was acquiring.

Westfield hopes to start construction in about a year and plans to complete the makeovers within five years, Lowy said.

Separately, Westfield and Federated agreed to the redevelopment of 18 malls in which Federated has stores..

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The value of those improvements, along with Westfield’s upgrades of the eight Southern California centers, will exceed $2 billion, Lowy said.

Westfield’s move to acquire the department stores makes strategic sense, said retail consultant Greg Gotthardt of Alvarez & Marsal.

“This means that they control their centers and can continue to reposition them,” Gotthardt said.

Other shopping center companies, including Macerich Co., Simon Property Growth Inc. and General Growth Properties Inc., also are negotiating with Federated to buy stores it no longer needs or is being required to divest.

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(BEGIN TEXT OF INFOBOX)

Changing hands

Here are the 12 California stores that Westfield Group is set to get from Federated.

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Macy’s

Escondido (North County Fair mall)

La Jolla (University Towne Center)

Palm Desert - apparel

Palm Desert - home

Santa Ana (MainPlace)

West Covina

Robinsons-May

Arcadia (Santa Anita)

Carlsbad (Plaza Camino Real)

Culver City (Fox Hills)

Escondido (North County Fair)

La Jolla (University Towne Center)

Santa Ana (MainPlace)

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Source: Times research


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