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Macerich Buys Out Its Panorama Mall Partner

Macerich Buys Out Its Panorama Mall Partner By SHELLY GARCIA Senior Reporter After shopping the Panorama Mall around for several months, The Macerich Co. has decided to buy out its joint venture partner and take full ownership of the center. The real estate investment trust is expected to close escrow shortly on the deal, the latest in a string of acquisitions the company made over the summer. Macerich is expected to pay $38 million for the 350,000-square-foot shopping center. The REIT has owned Panorama Mall since 1979 in a joint venture partnership with Prudential Real Estate Investors. Panorama Mall officials said they could not comment on “pending activity.” “We were marketing this property,” said Janet Fisher, vice president of asset management, adding, “It is currently off the market.” Sources said Macerich contacted a handful of potential buyers and invited them to bid on Panorama Mall early in the summer. The company did not attach a price to the property, but rather, asked bidders to make an offer. Sources said that bidders’ offers came in around $40 million. Some bidders believe Macerich never intended to sell Panorama Mall, but put the property out for bid to ascertain its market value. “Macerich has an unbelievable appetite for malls right now,” said one of the bidders who declined to be named. Like other investment properties, successful retail shopping centers are highly coveted in the current market. Low interest rates have increased the buying power of potential investors, and real estate offers far better returns than the current stock market. Among the smallest of enclosed centers, Panorama Mall has seen a renaissance since its anchor Wal-Mart took up residence in the late 1990s. The mall’s other anchor, La Curacao, an electronics and home goods chain that caters to Latinos, recently underwent an expansion. Panorama Mall also caters to the Latino community that surrounds the center with mostly regional retailers such as Rave, Forever 21 and Urban Kings. The mall, which has a waiting list of potential tenants, is currently 99-percent leased and in 2000 recorded sales per square foot of $353, on par with far larger malls that house the largest of the national chains. Panorama Mall was among the first shopping center acquisitions made by Macerich and the second shopping center it acquired in California. Most of the REIT’s growth has occurred since it became a publicly traded company in 1994, a move that provided greater access to capital for expansion and acquisition. Macerich currently owns 58 regional shopping malls and 21 community centers in 21 states. Locally, the REIT owns Santa Monica Place and Westside Pavilion. The REIT has stepped up its acquisition activity considerably in recent months. In June, Macerich acquired The Oaks, a 1.1-million-square-foot shopping center in Thousand Oaks for $152.5 million. In July, the company completed the acquisition of Westcor Realty Limited Partnership, which owns more than 10 million square feet of space in Arizona and Colorado, including Scottsdale Fashion Square. That acquisition, for $1.475 billion, includes nine regional malls and 18 neighboring urban villages. Macerich reported a net loss of $1.3 million or $0.04 a share on revenues of $79.1 million in the second quarter of 2002 ended June 30. That compares with net income of $6.8 million or $.20 a share on revenues of $80.7 million in the comparable period of 2001. The company attributed the results to a write-off from its investment in MerchantWired and revised its guidance for the full year upward. Funds from operations for the most recent period increased to $0.67 per diluted share, up from $0.66 in the prior year. In announcing its second-quarter results, Macerich also revised its guidance for the full 2002 year. The company said it expects funds from operations to increase to $3.14 to $3.25, up from previous guidance of $3.11 to $3.18.

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