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Del Amo Mall Being Sold, Sources Say

May 15, 2003|Roger Vincent | Times Staff Writer

Del Amo Fashion Center in Torrance, one of the largest shopping malls in the country, is being acquired for as much as $460 million by Virginia-based Mills Corp., real estate sources said Wednesday.

Mills, a publicly traded real estate investment trust, said earlier this month that it had agreed to buy a California retail property for more than $400 million, but declined to identify it until a financial and physical review of the property was complete. The seller is Los Angeles developer Guilford Glazer.

People familiar with the deal said Mills beat out local shopping center firms Macerich Co. and Caruso Affiliated Holdings for the 3-million-square-foot complex at Hawthorne and Sepulveda boulevards.

"There were three of us in the final running," said Rick Caruso, president of Santa Monica-based Caruso Affiliated Holdings. "Mills ended up being the lucky winner. That's what I've been told."

Real estate sources say Mills is expected to pay $435 million to more than $460 million. Even the low end of that range is high by industry standards, because the mall, which was founded 43 years ago, needs a makeover, real estate experts said. More than 400,000 square feet in the northeast wing once occupied by Montgomery Ward are vacant. The mall is financially sound, however. It is expected to post a $28-million profit this year, according to trade publication Real Estate Alert. That would represent half of Mills' $62.5-million profit for 2002.

Mills, which operates Ontario Mills and the Block at Orange in Southern California, is known for large-scale shopping centers that combine retail and entertainment uses. Tenants often are major-brand outlet stores, large electronics or sporting goods stores and leisure attractions such as theaters and skateboard parks.

One real estate source predicted that Mills would spend $60 million or more to upgrade and reposition Del Amo. Among current tenants are Macy's, Sears and JCPenney.

Glazer has "done a tremendous job of assembling great real estate and created an asset that garnered the highest price in California," said Arthur Coppola, president of Santa Monica-based Macerich. James Jones, president of Glazer's Torrance Co., declined to comment on the pending sale.

The previous high price for a California mall is believed to be the $415 million that General Growth Properties paid last year for the 1.5-million-square-foot Glendale Galleria.

The shopping center industry has experienced rapid consolidation over the last two years with many malls moving from private hands to large public companies, said Coppola, whose real estate investment trust owns 56 malls, including Westside Pavilion and Lakewood Center.

Many investors now view malls as better investments than other types of commercial real estate, Coppola said.

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