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California

Owners Seek Bids for Glendale Galleria

Real estate: Industry observers say the giant shopping mall will fetch more than $400 million.

September 05, 2002|JESUS SANCHEZ | TIMES STAFF WRITER

The owners of the Glendale Galleria have put the giant shopping mall up for sale, and industry observers say strong demand for such properties should prompt a long line of bidders. The mall is expected to sell for more than $400 million.

Institutional investors and some of the nation's largest mall operators, including Santa Monica-based Macerich Co. and Westfield America Inc. of Los Angeles, are among the likely bidders for the 250-store mall, according to real estate brokers and retail specialists.

"It's got the full complement of department stores and ... it's a very strong performer in a very healthy market," said retail consultant Rob York.

The 26-year-old mall is owned by a joint venture that includes health insurer Cigna Corp., the New York State Teachers' Retirement System and other investors. The field of prospective bidders for the 1.5-million-square-foot property should be narrowed to the finalists by early October and the sale should be completed by the end of the year, said Daniel Donahue, chairman of Costa Mesa-based Donahue Schriber, which manages the mall.

The owners put the mall, which sprawls over two blocks in the heart of Glendale, up for sale to take advantage of a heated investment market for prime commercial real estate. "The values being paid for regional malls are probably near a 10-year high," Donahue said.

Mall sales have remained strong all year long. Earlier this summer Macerich completed the acquisition of Arizona's largest mall owner, Westcor Realty, for about $662 million, while cross-town rival Westfield America was digesting the 14 malls it received in January as part of the $2.2-billion acquisition of Rodamco North America.

More recently, New York-based Trizec Properties Inc. tentatively agreed to sell its nearly year-old Paseo Colorado shopping center in Pasadena to an investment group in a deal valued at more than $100 million, according to people familiar with the transaction. Officials with Trizec were not available for comment.

"We expect more product to come on the market because of the pent-up demand," said Matthew C. Sullivan, who specializes in retail property sales for brokerage firm Colliers Seeley International Inc.

The owners of the Glendale Galleria are credited with keeping the property competitive over the years through expansion, attracting new retailers and experimenting with new concepts, such as a section of the mall devoted to young shoppers called The Zone.

Annual sales at the mall top $525 a square foot--among the highest in the nation, according to industry observers.

"Clearly it's a terrific property," said Macerich President Arthur Coppola, who said his firm does not comment on acquisition efforts. "It's comparable to assets that we have purchased recently. It should be a property that will be strong for a very, very long time."

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