Two Malls in Play as Blackstone Looks to Cash Out

Private-equity giant Blackstone Group LP and mall owner Glimcher Realty Trust are listing for sale two U.S. malls that they jointly own after Blackstone decided that rising mall values justified cashing out its investment in the properties.

Blackstone and Glimcher have hired brokerage Eastdil Secured to market WestShore Plaza mall in Tampa, Fla., and the Lloyd Center mall in Portland, Ore., according to people familiar with the matter. The listing, expected to hit the market within two weeks, comes after Glimcher disclosed this week that it is buying Blackstone’s 80% stake in a third mall the companies jointly own: Pearlridge Center in Honolulu.

Glimcher, which owns 24 U.S. malls, considered Pearlridge too valuable to allow other buyers a shot at it, Glimcher Chairman and Chief Executive Michael Glimcher said in an interview Thursday. The 1.1 million-square-foot mall generates annual sales per square foot of $500, well above the $404 average of the rest of Glimcher’s portfolio.

The Pearlridge deal is valuing the mall at $361.7 million, including debt, and Blackstone’s 80% equity stake at about $150 million. The two had jointly owned the mall since November 2010, when they paid $245 million to buy it from Northwestern Mutual Life Insurance Co. and then put a $175 million mortgage on it.

Glimcher financed its purchase of Blackstone’s stake in Pearlridge by selling 23 million shares this week.

Now Blackstone and Glimcher will put their two other malls on the block. Glimcher sold a 60% stake in WestShore Plaza and Lloyd Center to Blackstone in 2010 for roughly $63 million and the assumption of a 60% portion of the malls’ $215 million mortgage.

Unlike with Pearlridge, Glimcher couldn’t agree with Blackstone on how much Blackstone’s 60% stake in WestShore Plaza and Lloyd Center now is worth if Glimcher were to buy it back, according to people familiar with the matter. So, Glimcher will instead see what bids the malls attract on the open market before deciding whether it will buy Blackstone’s stake, sell its stake along with Blackstone’s or keep its stake and allow a third-party buyer to replace Blackstone.

“They are great assets,” Mr. Glimcher said. “We’ve decided to let the market tell us what the value is.”

WestShore Plaza and Lloyd Center aren’t as lucrative as Pearlridge. At 1.1 million square feet, WestShore Plaza generates annual sales per square foot of $419, slightly above Glimcher’s average. Lloyd Center, at 1.4 million square feet, generates $330 and has declined in recent years, said Ben Yang, an analyst with Keefe, Bruyette & Woods. Mr. Yang suspects that Glimcher will buy Blackstone’s stake in WestShore Plaza but not in Lloyd Center.

“It looks like WestShore is more in their wheelhouse, because it’s a higher quality asset than Lloyd Center,” he said.

Blackstone has roughly $160 million in assets under management.

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