It will probably take global retail giant Unibail-Rodamco-Westfield until the end of next year to sell most of its U.S. mall portfolio, with some of its top properties possibly being shed individually, according to one of JLL’s retail executives.
Whether there will be much buyer interest in Unibail’s holdings has already been a topic of discussion at the 2022 ICSC conference in Las Vegas.
“We had a client event last night and every client that was there asked me that same question, so it’s very relevant,” Greg Maloney, president and CEO of JLL Retail Property Management, said at a press event the brokerage held Monday at the Las Vegas Convention Center.
Paris-based Unibail announced several years ago, and has since reiterated, that it has put its U.S. holdings on the block. It has already sold some malls and stopped paying debt on some struggling properties, ridding itself of several underperforming malls.
“They have given a lot [of properties] back to the lenders, to servicers,” Maloney said. “We are doing three or four of them right now.”
He said he expected that some of Unibail’s roughly two dozen properties will catch the attention of the large U.S. mall landlords, such as Brookfield Asset Management and Simon Property Group. Unibail’s premier sites include Westfield World Trade Center in Manhattan and the Westfield Garden State Plaza in Paramus, New Jersey.
“I think if someone came and offered them a heck of a deal they would sell the whole portfolio,” Maloney said. “But I look at it this way: You’ve got four or five, eight to six top assets, that will probably go separately to whoever, be it a Brookfield or a maybe a Simon or whoever.”
Then the remainder of the mall holdings will be sold off, according to Maloney.
“I don’t think it will happen this year, but by the end of next year, I think most of them will be sold,” he said.
Simon Property CEO David Simon recently said his company, the largest U.S. retail landlord, isn’t interested in making any acquisitions and downplayed media reports of the company making bids.
CoStar News reached out to Unibail, Brookfield and Simon Property for comment but did not immediately hear back.
Pricey Acquisition
Unibail purchased Westfield Group in 2018 for nearly $16 billion, gaining 33 U.S. properties, including Westfield World Trade Center and Westfield Garden State Plaza.
The higher-profile malls will be attractive to investors, according to Maloney.
“They will find buyers for them,” he said. “They’re great product. The problem right now is pricing. It always is. The owner wants more and the buyer wants less.”
Eventually, the sale process will come to a conclusion. But the longer it takes, the greater the chance the malls start losing their edge and decline in a very competitive retail environment.
The length of the process is “not helping the assets,” because Unibail has stopped making investments, “putting new money,” into its U.S. malls, according to Maloney.
“Everybody knows if you don’t feed the beast, and the mall is the beast, if you don’t feed it it’s going to go down,” he said. “You have to be constantly reinventing, investing in look and feel.”