Macerich to Become Dominant Mall Operator in Phoenix, And to Add Strong Development Capability
SANTA MONICA, Calif., May 31 /PRNewswire-FirstCall/ -- The Macerich Partnership L.P., the operating partnership of The Macerich Company (NYSE: MAC), today announced that it has signed a definitive agreement under which it will acquire Westcor Realty Limited Partnership ("Westcor"), the dominant owner, operator and developer of regional malls and specialty retail assets in the greater Phoenix area. The total purchase price will be approximately $1.475 billion including the assumption of $733 million in existing debt and the issuance of approximately $80 million of convertible preferred operating units. The operating units will have a conversion price of $36.55 and a 9% dividend on an as-converted basis. The balance of the consideration to Westcor's equity holders will be paid in cash. This transaction has been approved by each company's Board of Directors, subject to customary closing conditions. It is currently anticipated that this transaction will be completed in the third quarter of 2002.
Macerich expects to realize an 8.5% unleveraged yield on the cost of the assets acquired in this transaction. Excluding the cost of non-revenue producing land to be acquired in the transaction, the anticipated unleveraged return is 8.9%.
Westcor's existing portfolio includes interests in nine regional malls with nearly 10 million square feet of space located in Arizona and Colorado. Eight of the nine malls are located in Arizona, including six in the Phoenix market. The greater Phoenix area is one of the fastest growing markets in the country, with strong demand and a low vacancy rate. The Westcor portfolio contains some of the leading retail assets in the country, including Scottsdale Fashion Square and Chandler Fashion Center in the Phoenix area and FlatIron Crossing in Colorado's Denver-Boulder area. Westcor also owns interests in 18 urban village and specialty retail assets strategically located in close proximity to the malls. The gross leasable area in these properties totals 5.6 million square feet. In addition, the Westcor portfolio includes two retail properties in Arizona that are due to break ground this month, as well as option rights for over 1,000 acres of valuable, well- situated undeveloped land.
Commenting on the transaction, Arthur Coppola, president and chief executive officer of Macerich stated, "We are very pleased to be acquiring Westcor, the pre-eminent owner, operator and developer of high-quality retail assets in the State of Arizona. The Westcor malls are performing at an exceptional level, with the stabilized malls having sales of approximately $407 per square foot and occupancy near 92%. The company has unprecedented dominance in the Phoenix Metropolitan Area, which blends extremely well with our portfolio and furthers our strong position in the Western U.S. While we are extremely pleased about adding the very productive Westcor assets to our portfolio, another key benefit is the addition of Westcor's development expertise to the Macerich team. Combining their stellar development capabilities with our strong acquisition, redevelopment and operating expertise will create an unmatched integrated platform for growth in our core markets. There is a great deal of growth that we can realize from Westcor's development pipeline and undeveloped land portfolio, including projects under development, significant land holdings adjacent to the existing portfolio and long-term regional mall sites under option agreements. We view this transaction as a great opportunity to expand our platform."
Earlier this month, Macerich reaffirmed its estimated Funds from Operations ("FFO") per share-diluted guidance in the range of $3.11 to $3.18 for 2002. Management expects the Westcor acquisition to be accretive to 2002 and 2003 FFO per share and further guidance will be given at the closing of the transaction.
"This merger of Westcor and Macerich is really a win-win situation for both sides," stated Robert Ward, president and chief executive officer of Westcor. "The skill sets of the two teams are quite complementary, with Westcor's development expertise and unparalleled knowledge of the Arizona retail market providing a perfect addition to Macerich's redevelopment and operating expertise. It was important to us to find a partner where there would be a good cultural fit between the two teams and where we are aligned in our effort to grow and create value through development. I am excited about the future for the combined entity."
"AEW has successfully partnered with the Westcor Companies for the past two decades," said Robert Gifford, Principal of AEW Capital Management L.P., a Boston-based real estate investment advisor that owns 73.3% of Westcor Realty on behalf of its institutional clients. "In 1980, we began by providing venture funding to a group of visionary entrepreneurs, who built what is now a $2 billion shopping center development company. Over the past five years alone, Westcor has delivered an extraordinarily successful $700 million portfolio of development projects that have greatly enhanced the quality of their communities while at the same time providing attractive returns to Westcor's financial partners. In Macerich, we believe that the company has found an ideal partner to take the Westcor franchise into the future. Macerich is extremely well positioned to capitalize on Westcor's operating properties, development pipeline and talented staff. We look forward to having future opportunities to do business with the combined companies."
Deutsche Bank Securities, Inc. acted as financial advisor to Macerich for the transaction.
The Macerich Company is a fully integrated self-managed and self- administered real estate investment trust, which focuses on the acquisition, leasing, management and redevelopment of regional malls and community centers throughout the United States. The Company is the sole general partner and owns an 80% ownership interest in The Macerich Partnership, L.P. After the transaction, Macerich will own interests in 55 regional malls and 21 community centers totaling approximately 57 million square feet. Additional information about The Macerich Company can be obtained from the Company's web site at www.macerich.com.
Investor Conference Call
The Company will host a conference call on May 31, at 10:30 AM Pacific Time along with an online Web simulcast and rebroadcast to discuss details of the acquisition. The call will be available on The Macerich Company's website at www.macerich.com , and through CCBN at www.CCBN.com . To listen to the call, please go to any of these web sites at least 15 minutes prior to the call in order to register and download audio software if needed. An online replay will be available for 90 days after the call.
Note:This release contains statements that constitute forward-looking statements. Stockholders are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to vary materially from those anticipated, expected or projected. Such factors include, among others, general industry, economic and business conditions, which will, among other things, affect demand for retail space or retail goods, availability and creditworthiness of current and prospective tenants, tenant bankruptcies, lease rates and terms, availability and cost of financing and operating expenses; adverse changes in the real estate markets including, among other things, competition from other companies, retail formats and technology, risks of real estate development and redevelopment, acquisitions and dispositions; governmental actions and initiatives; environmental and safety requirements; and terrorist activities which could adversely affect all of the above factors. The reader is directed to the Company's various filings with the Securities and Exchange Commission, for a discussion of such risks and uncertainties.
WESTCOR DEVELOPMENT PIPELINE and PERIPHERAL LAND
La Encantada -- Tucson, Arizona -- This is a 37-acre site located at the northwest corner at Skyline Drive and Campbell Avenue in Tucson. Construction has commenced on a 258,000 square foot open-air village with a variety of upscale national retailers and boutiques. Stabilization is projected to occur in 2004.
Scottsdale 101 -- Scottsdale, Arizona -- This is a 70 acre site located at the southwest corner of the Pima Freeway and Scottsdale Road in Scottsdale, Arizona, which is ground leased from the Arizona State Land Department on a 99 year ground lease and plans are to build a 629,000 square foot community center. Construction has commenced this year with stabilization expected in 2004.
Gilbert, Arizona -- This is a 600-acre site. Westcor has an option through 2010 to acquire the 120-acre regional mall site at a price of $100,000 per acre. Westcor has a participation right in the balance of the land of 16.5% of peripheral land sales on the surrounding 480 acres.
Paradise West 1/Paradise Ridge --North Scottsdale, Arizona -- Westcor has a "preferred right" from the Arizona State Land Department on approximately 300 acres at the northwest corner of the Pima Freeway and Scottsdale Road. Plans are to build a two or three anchor mall with about 300,000 square feet of shop GLA.
Goodyear, Arizona -- Westcor has an option through 2010 to acquire at $100,000 per acre a regional mall parcel of approximately 125 acres. Further, Westcor has a 25% participation in the peripheral land sales of the surrounding approximately 200 acres.
Westcor Peripheral Land:
Peripheral Land Ownership
Location Opportunity Acreage of Land
Flagstaff Mall Flagstaff, Railhead
Arizona Assoc Ground 92.00 50%
Paradise Valley Phoenix,
Mall Arizona PVIC 1.20 50%
Desert Sky Mall Phoenix,
Arizona Peripheral 37.10 50%
Superstition Mesa (Phoenix),
Springs Center Arizona Peripheral 1.40 100%
Mall Ground
Lease 40.97 50%
Arrowhead Towne
Center Glendale (Phoenix),
Arizona Bowest Trust 18.00 18%
Midcor V 17.00 82%
RLR 1 29.00 50%
FlatIron Crossing Broomfield,
Colorado Flat Iron
Pads 6.00 100%
Chandler Fashion Chandler (Phoenix),
Center Arizona Propcor II 8.67 50%
Propcor 79.36 25%
Prescott Gateway Prescott,
Arizona Lee West 21.00 50%
Mall Totals 351.70
WESTCOR PROPERTY LISTING
Year Built/
Location Expanded Ownership
Regional Malls
Scottsdale Scottsdale (Phoenix), 1961/1991/1998 50%
Fashion Arizona
Square
Flagstaff Mall Flagstaff, 1979/1986 100%
Arizona
Paradise Valley Mall Phoenix, 1979/1990 100%
Arizona
Desert Sky Mall Phoenix, 1981/1993 50%
Arizona
Superstition Springs
Center Mesa (Phoenix), 1990/1994 33%
Arizona
Arrowhead Towne
Center Glendale (Phoenix), 1993 33%
Arizona
FlatIron Crossing Broomfield, 2000 50%
Colorado
Chandler Fashion
Center Chandler (Phoenix), 2001 100%
Arizona
GLA excluding Mall shop
Total Department Sales Per March 2002
GLA stores Square Ft. Occupancy
Regional Malls
Scottsdale Fashion
Square 1,930,832 591,249 $550 94%
Flagstaff Mall 352,788 148,776 $320 81%
Paradise Valley
Mall 1,222,353 391,779 $384 96%
Desert Sky Mall 887,494 280,480 $275 79%
Superstition Springs
Center 1,060,461 342,291 $366 91%
Arrowhead Towne
Center 1,130,610 346,540 $402 89%
FlatIron Crossing 1,495,912 684,236 $386 94%
Chandler Fashion
Center 1,294,481 532,196 opened
10/01 96%
Mall sub-totals: 9,374,931 3,317,547 $407 92%
Department Stores
Regional Malls
Scottsdale Fashion Square Dillards, Macy's, Neiman-Marcus,
Nordstrom, Robinsons-May, (2)Harkins
Flagstaff Mall Dillards, JC Penney, Sears
Paradise Valley Mall Dillards, JC Penney, Macy's,
Robinsons-May, Sears, Harkins Theater
Desert Sky Mall Dillards, Mervyn's, Burlington Coat
Factory, Sears, Harkins Theater
Superstition Springs Center Dillards, JC Penney, Mervyn's,
Robinsons-May, Sears, Super Saver Cinema
Arrowhead Towne Center Dillards, JC Penney, Mervyn's,
Robinsons-May, Sears (3/02), AMC
FlatIron Crossing Dillards, Nordstrom, Foleys,
Lord & Taylor, Gaylans, AMC
Chandler Fashion Center Dillards, Nordstrom, Robinsons-May, Sears,
Harkins Theatre
Year Built/
Location Expanded Ownership
Regional Malls -
Under Development
Prescott Gateway Prescott, 2002 100%
Arizona
GLA excluding Mall shop
Total Department Sales Per March 2002
GLA stores Square Ft. Occupancy
Regional Malls -
Under Development
Prescott Gateway 566,706 303,266 opened 3/02 61%
Mall Totals 9,941,637 3,620,813
Department Stores
Regional Malls -
Under Development
Prescott Gateway Dillards, JC Penney, Sears
Year Built/
Location Expanded Ownership
Urban Villages
Arizona Lifestyles
Galleries Phoenix, 1982 50%
Arizona
Paradise Village
Gateway Phoenix, 1995/2001 67%
Arizona
PVIC - ground
leases Phoenix, various 50%
Arizona
Village Center Phoenix, 1985 50%
Arizona
Village Crossroads Phoenix, 1993 50%
Arizona
Village Fair Phoenix, 1989 50%
Arizona
Village Plaza Phoenix, 1978 100%
Arizona
Village Square I Phoenix, 1978 100%
Arizona
Village Square II Phoenix, 1978 100%
Arizona
Camelback Colonnade Phoenix, 1961-1976,
Arizona 1994 75%
Promenade Sun City, 1983 50%
Arizona
Superstition Springs
Power Cntr. Mesa (Phoenix), 1991 100%
Arizona
Chandler Festival Chandler (Phoenix), 2001 50%
Arizona
Chandler Gateway Chandler (Phoenix), 2001-2002 50%
Arizona
Chandler Blvd
(existing) Chandler (Phoenix), 2001-2002 50%
Arizona
Chandler Blvd
(11 pads) Chandler (Phoenix), 2002-2004 50%
Arizona
Westbar Phoenix, various 75%
Arizona
GLA excluding Mall shop
Total Department Sales Per March 2002
GLA stores Square Ft. Occupancy
Urban Villages
Arizona Lifestyles
Galleries 125,092 125,092 100%
Paradise Village
Gateway 223,104 223,104 100%
PVIC -ground leases 245,540 245,540 N/A
Village Center 195,191 195,191 100%
Village Crossroads 187,336 187,336 100%
Village Fair 272,617 272,617 97%
Village Plaza 110,612 110,612 96%
Village Square I 136,890 136,890 100%
Village Square II 147,615 147,615 96%
Camelback Colonnade 588,137 588,137 97%
Promenade 70,125 70,125 93%
Superstition Springs
Power Cntr. 279,144 279,144 100%
Chandler Festival 367,795 367,795 90%
Chandler Gateway 255,955 255,955 93%
Chandler Blvd
(existing) 51,582 51,582 57%
Chandler Blvd
(11 pads) 113,800 113,800 To be built
Westbar 898,005 898,005 N/A
GLA excluding Mall shop
Total Department Sales Per March 2002
GLA stores Square Ft. Occupancy
Urban Villages
Arizona Lifestyles
Galleries 125,092 125,092 100%
Paradise Village
Gateway 223,104 223,104 100%
PVIC -ground leases 245,540 245,540 N/A
Village Center 195,191 195,191 100%
Village Crossroads 187,336 187,336 100%
Village Fair 272,617 272,617 97%
Village Plaza 110,612 110,612 96%
Village Square I 136,890 136,890 100%
Village Square II 147,615 147,615 96%
Camelback Colonnade 588,137 588,137 97%
Promenade 70,125 70,125 93%
Superstition Springs
Power Cntr. 279,144 279,144 100%
Chandler Festival 367,795 367,795 90%
Chandler Gateway 255,955 255,955 93%
Chandler Blvd
(existing) 51,582 51,582 57%
Chandler Blvd
(11 pads) 113,800 113,800 To be built
Westbar 898,005 898,005 N/A
Majors
Urban Villages
Arizona Lifestyles Galleries Thomasville, Home One Furniture, Stratford
Antiques, Colorado Retreat
Paradise Village Gateway Bed, Bath & Beyond, Ross, PETsMART,
Staples, Albertsons, Walgreens, Garcias
PVIC -ground leases Mervyn's, BJ's Auto Spa, Coco's, Chili's,
Red Lobster, Olive Garden, Houlihans
Village Center Comp USA, Target, REI
Village Crossroads Michael's, Burlington Coat, Outback
Steakhouse, Don Pablos
Village Fair Office Max, Ulta, Sports Authority,
Toys R Us, Strouds, Best Buy
Village Plaza Sun Foods Market, Osco
Village Square I Circuit City, TJ Maxx
Village Square II Mervyn's, Big 5, Marie Callendar's
Camelback Colonnade Marshalls, Fry's, Best Buy, Mervyn's,
Last Chance, Michael's, Old Navy,
PETsMART, MCI
Promenade York Furniture
Superstition Springs
Power Cntr. Ross, Best Buy, Service Merchandise,
Burlington Coat, Walmart, Olive Garden
Chandler Festival Ultimate Elec, PETsMART, Nordstrom Rack,
Lowe's, Ross, TJ Maxx, Linens & Things,
Office Max
Chandler Gateway Razmataz, Circuit City, Great Indoors,
Paddy O Furniture, Olive Garden, B of A,
Abuelos
Chandler Blvd (existing) PF Chang's, Compass Bank
Chandler Blvd (11 pads)
Westbar Circuit City, Old Navy, Premier Inn,
Wyndham Hotel, Cost Plus, UA,
Barnes & Noble
Year Built/
Location Expanded Ownership
Specialty Retail
Borgata Scottsdale, 1981 100%
Arizona
Shops at Gainey Village Scottsdale, 2000 50%
Arizona
Hilton Village Scottsdale, 1982 50%
Arizona
GLA excluding Mall shop
Total Department Sales Per March 2002
GLA stores Square Ft. Occupancy
Specialty Retail
Borgata 87,724 87,724 87%
Shops at Gainey
Village 138,319 138,319 95%
Hilton Village 96,640 96,640 97%
Majors
Specialty Retail
Borgata Specialty Shops
Shops at Gainey Village Garduno's, Bloom
Hilton Village Houston's, Bank One, Wells Fargo
Year Built/
Location Expanded Ownership
Development Projects
Scottsdale 101 Scottsdale (Phoenix), 2003 46%
Arizona
La Encantada Tucson, 2002-2004 100%
Arizona
GLA excluding Mall shop
Total Department Sales Per March 2002
GLA stores Square Ft. Occupancy
Development Projects
Scottsdale 101 629,000 629,000 To be built
La Encantada 258,000 258,000 To be built
Majors
Development Projects
Scottsdale 101
La Encantada Harkin's Theatre, Circuit City, Expo,
Bed, Bath & Beyond
Year Built/
Location Expanded Ownership
Office
Scottsdale Fashion
Office Scottsdale(Phoenix), 1989 50%
Arizona
Paradise Village
Office Park Phoenix, 1982 50%
Arizona
GLA excluding Mall shop
Total Department Sales Per March 2002
GLA stores Square Ft. Occupancy
Office
Scottsdale Fashion
Office 123,581 123,581 88%
Paradise Village
Office Park 46,650 46,650 94%
Majors
Office
Scottsdale Fashion Office Norwest Bank, Net Pro Computing,
Vision Offices
Paradise Village
Office Park SW Risk Services, Cimato & Assoc,
Churchill Mortgage
GLA excluding Mall shop
Total Department Sales Per March 2002
GLA stores Square Ft. Occupancy
Total Non-Mall 5,648,454 5,648,454 $280 96%
Total Portfolio 15,590,091 9,269,267
SOURCE The Macerich Company
CONTACT: Arthur Coppola, President and Chief Executive Officer, or Thomas E. O'Hern, Executive Vice President and Chief Financial Officer, of The Macerich Company, +1-310-394-6000/