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MacArthur Center under new management

Jordan Crawford | 6/24/2014, 3:13 p.m.
Taubman Centers Inc. has signed a deal to sell MacArthur Center Mall.

Taubman Centers Inc., the developer and owner of MacArthur Center since 1999 when it opened in downtown Norfolk has signed a deal to sell it.

The company, Based in Bloomfield Hills, Mich., announced last Wednesday that it reached a $1.4 billion agreement to sell seven of its malls to real estate investment company Starwood Capital Group, a relative newcomer to the shopping center business, with headquarters in Greenwich, Conn. Starwood now has 21 malls and shopping centers in 15 states, none in Virginia.

In addition to the 1 million-square-foot MacArthur Center, Taubman plans to sell outdoor center Stony Point Fashion Park in Richmond and Northlake Mall in Charlotte, N.C., along with two malls in Michigan and one each in Texas and Florida.

Taubman officials said the sale is intended to free up capital for new development, including seven malls now under construction, three of them in China and South Korea. The seven malls slated for Starwood are strong performers, but their sales per square foot fall at the low end of all Taubman shopping centers, which together averaged $721 in 2013, said Christopher Tennyson, a spokesman for the developer.

Without the properties slated for Starwood, the remaining Taubman malls will have average sales per square foot of $850, Tennyson said.

“The consistency of the portfolio that we’re keeping is really off the charts,” he said.

The deal, which includes the assumption of $620 million in debt by Starwood, is expected to close in the fourth quarter this year.

Until then, McArthur Center officials said, they expect nothing to change. “As far as we’re concerned, it’s business as usual,” said Jim Wofford, the Norfolk mall’s general manager.

After the Starwood takeover, however, MacArthur Center and the region’s shoppers could see some benefits, Wofford said. The new owner may give increased attention to the properties in its portfolio, he predicts.

“I think they’ll be looking for ways to take these assets and make them even better,” Wofford said.

He suggested that the owners might add to and improve the tenant mix, “either by bringing in a third anchor for the center or bringing in retailers that would be game-changers for the market.”

The empty lot outside the mall at Freemason Street at Monticello Avenue was originally slated for another anchor store that never came. Nordstrom’s lone Hampton Roads store and a Dillard’s currently anchor the mall, the showpiece of downtown redevelopment efforts.

Starwood Capital, which has specialized in hotel and residential properties and has an arm that invests in energy infrastructure, launched its Starwood Retail Partners subsidiary two years ago after acquiring seven malls from Australian developer Westfield Group. In November, it bought another seven malls from Westfield Group.

“They are relatively new at it, but they have a pretty sizable portfolio now,” Tom Johnson, a Starwood spokesman, said of the company’s retail arm. “It has been a growing business for them.”