Starwood to acquire $1.64bn mall portfolio

The Greenwich, Connecticut-based firm is purchasing a portfolio of seven shopping centers throughout the US from Sydney-based developer The Westfield Group.

Starwood Capital Group has entered into agreements to acquire a portfolio of US shopping centers from Sydney-based developer The Westfield Group for $1.64 billion. The Greenwich, Connecticut-based real estate investment firm will own and manage a majority interest in the seven non-core properties, while Westfield will retain a 10 percent interest in the portfolio, which totals more than 7.9 million square feet. 

The shopping centers include Belden Village in Canton, Ohio; Franklin Park in Toledo, Ohio; Great Northern in North Olmstead, Ohio; Parkway in El Cajon, California; West Covina in West Covina, California; Capital in Olympia, Washington; and Southlake in Merrillville, Indiana. Parkway, the largest property in the transaction at 1.3 million square feet, is allocated $407 million of the purchase price. The centers have an average sales-per-square-foot of $217, according to data from Real Capital Analytics. 

Westfield chief executive Peter Lowy explained that the current sale is part of the firm’s strategic plan to generate greater shareholder value. “We are focused on redeploying our capital into superior retail destinations in major cities by divesting non-core assets and introducing joint venture partners into our high-quality portfolio of assets,” he said in a statement.

Representatives from Starwood declined to comment, so it is unclear whether or not the portfolio has been purchased on behalf of its latest opportunity fund, Starwood Distressed Opportunity Fund IX. The vehicle closed on $4.2 billion in equity in April.

This is not the first billion-dollar transaction between the two firms, as Starwood acquired a similar portfolio of seven shopping malls from Westfield in April 2012. The properties, located throughout the US, totaled $1.15 billion. Westfield also kept a 10 percent interest in that portfolio, similar to the terms of the present deal. 

After the transaction’s close, which is expected by the fourth quarter of 2013, Westfield will own 40 shopping centers in the US. Currently, the firm is starting work on the retail portion of New York’s World Trade Center, in which it invested $612.5 million through a joint venture with the Port Authority of New York and New Jersey in July 2011.