Unibail-Rodamco-Westfield stunned many in the retail and real estate field last year, when it announced it planned to sell all of the U.S. malls it had just obtained when it acquired Westfield, including Montgomery Mall and Wheaton Plaza. It set a target date of December 31, 2022 for unloading the properties, so it could focus again on its European holdings. With buyers so far not making offers Unibail finds acceptable, its CEO informed investors last week that the deadline for completing the selloff is now the end of 2023.
Getting the full value of that portfolio was already going to be a challenge amidst the pandemic. But at least one expert is now questioning the wisdom of Unibail's openness in publicly announcing it wanted to quickly divest itself of the malls, and setting a relatively short deadline in the first place. "Who is the buyer in the U.S.?" Green Street senior analyst Rob Virdee asked the Wall Street Journal. "If the bidder knows you're on the run and you have to make a sale, they're not going to offer you a good price."
How did Unibail end up having to switch gears so quickly, and in the position of essentially announcing a fire sale? The Wall Street Journal explains that the firm took on tremendous debt to acquire the Westfield properties. Activist investors who seized control of Unibail's board two years after the Westfield deal were angered about that debt, and once in charge, abruptly directed that the company sell the malls to reduce it.
11 comments:
There are plenty of people no doubt who would be happy to bulldoze the entire site and redevelop. One can only look to White Flint and Lakeforest malls as very real examples of that. They do have a mall redev plan changing parts of it to more of a town center style. Is that still on the table? I guess it depends on the buyer.
7:24: I can think of a number of firms in the county alone who would like the site. The issue seems to be that Unibail made it known that they are over a barrel, and smart buyers are therefore not likely to meet the asking-price Unibail wants at this time.
I would not want to see that mall be cleared and redeveloped because I think there's still a place for nice malls. If they implement their plan to pull off the Sears and Macy's wings and put in that town center section and keep the rest of it, I think it would do well.
I'm with you on that. It's much smarter to keep the revenue coming in from the mall while building around it over time, rather than razing it at the outset. A lot can be learned from the White Flint debacle - but the Lakeforest owners didn't get the memo, apparently.
There are malls in the region with packed lots. Usually they have good restaurants that draw crowds. Montgomery needs more than Cheesecake Factory, Pepe Pizza and California Pizza Kitchen.
I don't disagree on better food to attract but Cheesecake and Cal. Pizza Kitchen are both awful. By the way, I've already been to Frank Pepe and true to its reputation, it was about the best pizza I've ever had. The lines have been long every day. Now, that's a place that will and has attracted.
Well, now I know why Montgomery Mall appears to be failing: Unibail needs to sell due to large debt and has no interest in the mall. Mont. Mall is the opposite of Tysons and Tyson's Galleria. Both are very busy and have appealing stores. Hopefully Montgomery Mall will be purchased by an entity that wants to bring it back to where it once was.
12:38 - That's a great point about Tyson's. Spent a lot of time there during the pandemic. They should call the Lerner's and ask them to submit a bid for Montgomery Mall. You're right, Montgomery is mostly empty. Pandemic didn't help any retail but Tyson's was always busy. Their no mask policy helped them for sure but as you say, much nicer offerings over what we have.
Seriously, people would go to Tysons to avoid wearing a mask? All I can say is wow.
Actually Federal Realty would be best. Look at Bethesda Row and how quickly they backfill when a business leaves. Bethesda Row is always busy and interesting. To address masks at Tysons, some businesses still ask that patrons wear masks. In addition at Tyson's Galleria many of the businesses allow only a few patrons in at a time. They literally have lines of ppl waiting.
Tyson's no longer requires patrons at any store to mask. That's old news. The reason for letting few people into the upscale stores in Tyson's II has nothing to do with masks but security. With all the smash and grab robberies at upscale retailers, Tyson's decided to reduce the amount of customers in certain stores as well as have security right outside the door. Lastly, Federal Realty isn't in the shopping mall business thus would not be a fit for MoCo Mall.
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