12/12/2012

Macerich Lists 5 Retail Centers Near Seattle

A Macerich partnership is planning to market two suburban Seattle malls and three neighboring shopping centers that could fetch a combined $175 million.

The offering encompasses 1.2 million square feet at properties that total 1.5 million sf when separately-owned anchor space is counted. At the estimated value, a buyer’s initial annual yield would be 8%. The offered space is 95% leased.

Jones Lang LaSalle has the listing for a joint venture between Macerich and Ontario Teachers. Marketing is expected to begin in early January, with bids due in mid-February. Investors may bid on individual properties.

Three of the properties are clustered together in Silverdale, Wash.: the 715,000-sf Kitsap Mall, which is 97% leased; Kitsap Place, an 87,000-sf community center that is 85% leased; and the 51,000-sf North Point at Kitsap, four freestanding retail buildings that are fully leased.

The other properties are in Burlington, Wash. The 442,000-sf Cascade Mall is 94% leased. The adjacent Cross Court Plaza, a 160,000-sf shopping center, is fully leased.

Macerich and Ontario Teachers own the properties via Pacific Premier Retail, a joint venture they founded in 1999 that is structured as a REIT. Macerich, a retail REIT in Santa Monica, Calif., has a 51% interest and Toronto-based Ontario Teachers owns the rest through its real estate investment arm, Cadillac Fairview. Pacific Premier owns some $1.3 billion of retail properties.

The most valuable property listed is Kitsap Mall. Macerich carried it on its books at $79 million at the end of last year, according to securities filings. Excluding separately owned Sears and Kohl’s stores, the mall has 534,000 sf. The listing includes three anchor stores: JC Penney (157,000 sf until 2018), Macy’s (121,000 sf until 2024) and Barnes & Noble (51,000 sf until 2015). The in-line space is 90% leased and has average sales of $400/sf. Kitsap Mall is at 10315 Silverdale Way NW.

Kitsap Place, across from the mall at 10300 Silverdale Way NW, has a book value of $10 million in Macerich’s filings. Anchor tenants are T.J. Maxx (26,000 sf until 2023), Michaels (23,000 sf until August 2013) and Dollar Tree (11,000 sf until 2015). The vacancy is concentrated in the 27,000 sf of in-line space, which is just 51% occupied, providing upside potential.

North Point at Kitsap is also adjacent to the mall, at 3108-3138 NW Randall Way. Macerich is carrying it at $7.7 million. Tenants include La-Z-Boy (16,000 sf until 2016), f.y.e. (14,000 sf until 2016) and Party City (14,000 sf until 2018).

The Silverdale properties’ primary trade area has 128,000 residents with an average household income of $67,000, according to marketing materials.

The larger Burlington property, Cascade Mall at 201 Cascade Mall Drive, had a book value of $46.8 million at the end of last year. Anchor tenants include Macy’s (60,000 sf until 2020 and 51,000 sf until October 2014), Sears (74,000 sf until 2015) and JC Penney (50,000 sf until October 2014). Other major tenants include Cineplex Odeon (41,000 sf until 2019), T.J. Maxx (25,000 sf until 2023) and Chuck E. Cheese (11,000 sf until 2017). The mall has 131,000 sf of in-line space that is 81% leased.

Cross Court Plaza, also on Cascade Mall Drive, is anchored by a separately owned 90,000-sf Target. There is 70,000 sf of offered space, including 23,000 sf leased to OfficeMax until June 2015. Macerich valued it at $7.5 million.

The offering includes 17 acres of undeveloped land adjacent to Cascade Mall.

The primary trade area for the Burlington properties has 153,000 residents with an average household income of $65,000.

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