The owner of Chandler Fashion Center has sold a nearly 50 percent share of the property to a Chicago-based real estate investment management firm.
Macerich, Westcor's parent company, announced a joint venture with Heitman involving the Chandler mall and another mall in New Jersey. Macerich receives $167.5 million in net cash proceeds in exchange for a joint-venture share of 49.9 percent of the mall and assumes a pro rata share of the property's debt.
Chandler Fashion Center was developed in 2001 and was acquired by Macerich in 2002. The 1.32-million-square-foot shopping center is anchored by Nordstrom, Dillard's, Sears and Macy's and had an occupancy rate of 96 percent at the end of last year.
"We have several joint ventures across our portfolio. It's a very common practice of ours. In terms of Chandler Fashion Center, it's business as usual. There will be no changes," said Anita Walker, Westcor spokeswoman. "Westcor still owns and operates the majority, and they (retailers, customers) will see no difference."
Bob Kammrath, a Phoenix real estate expert, said Macerich is being smart by choosing to enter joint ventures to raise capital to reduce debt. The alternatives would be issuing stock, which dilutes existing stockholders, or borrowing more money, he said.
"This seems like the logical way to stiffen up the balance sheet," he said. "This is the most logical way to avoid the pitfalls. True, you're giving something up because you're selling some of the assets, but you're still keeping the management control, which is a big revenue generator also."
It's likely there will be more joint ventures involving other Macerich properties, Kammrath said.
"I think you are likely to see more of that with the properties with good occupancy," he said. "At least in this neck of the woods, these guys ... most of their properties are well performing at least based on occupancy."
Heitman manages about $20 billion in assets invested directly and indirectly in North America, Europe and Asia.
"Like Macerich, Heitman is focused on high-quality real estate, and we are very pleased to be entering into a partnership with a well-positioned institution that we have known for many years," Art Coppola, Macerich chairman and CEO, said in a statement.
Macerich will continue to manage the properties with the "added value of Heitman's expertise as an investor and partner in quality commercial real estate assets," according to Macerich.
In February, Macerich announced that it was going to tap into roughly $500 million in equity from selling assets and doing joint ventures during its current fiscal year. The properties involved in the joint ventures are "strong, class A, regional malls" Coppola said.
In addition to raising equity, the joint ventures allow the partners to assume a substantial percentage of the properties' mortgage debt, he said.
"We have done business with Macerich and its principals for almost 20 years," Maury Tognarelli, Heitman's CEO, said in a statement. "We view this as an attractive opportunity to expand the relationship by partnering with one of the industry's premier regional mall operators in two established and irreplaceable fortress malls situated in affluent markets."
In the East Valley, Macerich also owns Fiesta Mall and Superstition Springs Center in Mesa, and SanTan Village in Gilbert.