Vornado and its Affiliate, Alexander's, Agree to Sell Green Acres and Kings Plaza Malls
Vornado Realty Trust agreed to sell its Green Acres Mall in Valley Stream, NY to The Macerich Co. for $500 million, or about $278 per square foot.
In a separate agreement, Alexander's Inc., Vornado's 32.4% affiliate, also agreed to sell its Kings Plaza Mall in Brooklyn, NY to Macerich for $751 million, or about $626 per square foot.
Green Acres Mall is in Long Island's southern Nassau County submarket. The 1.8 million-square-foot enclosed mall was built in 1958 on 96 acres. The center historically enjoys high occupancy and is anchored by Sears, Macy's, JC Penney and Kohls. Green Acres was renovated and expanded in 2007 and has 408,000 square feet of in-line mall tenant space that includes Aeropostale, American Eagle, Forever 21, H&M and Modell's sporting goods. The mall is 94% occupied and the mall tenant's annual sales per foot exceed $520.
Net proceeds from the sale of Green Acres Mall will be $185 million after closing costs and repaying the existing loan, which Vornado refinanced in 2008 at $335 million. The sale will result in a financial statement gain of $195 million, and a tax gain of nearly $304 million, which is expected to be deferred as part of a like-kind exchange.
Kings Plaza Mall is in South Brooklyn near Flatbush and Avenue U. The 1.2 million-square-foot enclosed mall was built in 1969 on 24.3 acres. It is anchored by Macy's, Sears, Best Buy and Old Navy. The mall tenant's annual sales per square foot are $650. The center is currently 95% occupied and has a in-line tenant line-up that includes Aeropostale, American Eagle, Armani Exchange, Forever 21, H&M, MAC, Pink, Swarovski and Victoria's Secret.
The financial statement gain from the sale of Kings Plaza Mall will be $602 million with a tax gain of nearly $624 million. Vornado, for its part, will realize a financial statement gain of approximately $181 million and a tax gain of approximately $202 million. Both group's tax gains are expected to be paid out to shareholders as a special long-term capital gain dividend.
Commenting on the transaction, Arthur Coppola, chairman and CEO of Macerich, said: "These transactions are consistent with our investment strategy of acquiring assets in the major markets where we have our best assets and selling non-core assets and recycling capital. This allows us to build on our New York portfolio and will be an excellent complement to Queens Center. At Kings Plaza and Green Acres there are substantial opportunities to replace lower sales producing tenants with higher productivity tenants, in a manner similar to what we accomplished after we acquired Queens Center."
The sales of both malls are subject to customary closing conditions. Kings Plaza is expected to close in the fourth quarter of 2012. Green Acres is expected to close in the first quarter of 2013, and is contingent on Macerich first closing on Kings Plaza.
CoStar Group Senior News Editor Mark Heschmeyer contributed to this report.