NEW YORK — As acquisition opportunities in the U.S. dry up, real estate investment trusts are looking more closely at overseas and Latin American buys. General Growth Properties Inc., for example, closed late last year on malls in Brazil and...
NEW YORK — As acquisition opportunities in the U.S. dry up, real estate investment trusts are looking more closely at overseas and Latin American buys. General Growth Properties Inc., for example, closed late last year on malls in Brazil and Costa Rica, while Westfield Group is flirting with the owners of a $1.2 billion mall outside of London. It already owns a $4 billion portfolio in the U.K.
“We have not gone international yet, but the rest of the world really has a lot of catching up to do with the U.S. in terms of shopping and the development of their retail real estate,” said Stephen Lebovitz, president of CBL & Associates Properties Inc. “There is a huge opportunity there to export our expertise and it’s something we’ll all be focusing on.”
Some REITs are using international ventures as testing grounds for new business lines. The Mills Corp. is a prime example. In the last weeks of 2004, the company joined up with a Canadian-based mall owner to buy St. Enoch Centre in Glasgow, a 715,000-square-foot mall for $524 million, with up to 50,000 square feet of expansion space.
But its major accomplishment in Europe has been pioneering the hybrid entertainment and retail facility with the 1.4-million-square-foot Madrid Xanadu, the model entertainment shopping center with several hundred thousand square feet of retail and a 20-story snow facility, which can support up to 400 skiers at a time. It plans similar projects in Rome and Barcelona.
“It’s very difficult to build retail in Europe,” said Larry Siegel, chairman and chief executive officer of The Mills. “Retail is kind of taboo, but leisure and entertainment is extremely desired, which is why we’ve been accepted there.”
Its success in Spain has inspired a North American knockoff — The Mills plans to replicate this model in the redevelopment of the New Jersey Meadowlands, where it is pairing up with a local real estate developer to build a massive $1.3 billion, 4.8-million-square-foot office, hotel, retail and entertainment complex, also dubbed Xanadu.
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