Shopping center developers are developing an appetite for owning retail boxes.
On Monday, General Growth Properties said in its third-quarter report that it purchased five stores from Macy’s Inc. for $46 million.
The Macy’s deal follows GGP’s disclosure earlier this year that the company formed a joint venture with Simon Property Group and Authentic Brands Group LLC to acquire Aéropostale Inc. GGP’s investment there was $20.4 million.
Of the five Macy’s stores, only one will continue operating and GGP will find alternative uses for the space. Details were not provided, though some discussion is expected during its third-quarter conference call Tuesday.
Macy’s, in its disclosure of the deal with GGP, said it expects to realize a gain of $32 million in the third quarter of fiscal 2016. The selloff is part of Macy’s previously announced store rationalization program involving closing some 100 stores in early 2017, to invest more into its best stores and digital businesses, and to capitalize on opportunities within its real estate portfolio.
The five Macy’s stores sold to GGP are:
• The 151,000-square-foot unit in Carolina Place Mall in Pineville, N.C., which opened in 1993 and has 72 associates.
• The 104,000-square-foot Oakwood Mall store in Eau Claire, Wisc., which opened in 1991 and has 61 associates.
• The 146,000-square-foot Quail Springs Mall store in Oklahoma City, Okla., which opened in 1986 and was closed in spring 2016.
• The 265,000-square-foot Tysons Galleria store in McLean, Va., which opened in 1988 and has 125 associates.
• The 124,000-square-foot Greenwood Mall in Bowling Green, Ky., which opened in 1980 and has 61 associates.
The $27 billion, 880-unit Macy’s will continue to operate the Tysons Galleria store on a lease from General Growth Properties. Macy’s also continues to operate another store in McLean, Va., at the nearby Tysons Corner Center.
The Carolina Place, Greenwood and Oakwood stores will stay open through the holiday season and will be closed in the spring.
Four of the units were sold in the third quarter and one — the Greenwood Mall store — was sold earlier in the year.
Macy’s said that its associates affected may be offered positions in nearby stores where possible. Eligible full-time and part-time associates who are laid off due to the store closings will be offered severance benefits.
In its third-quarter report, GGP said that its same store net operating income increased 3.8 percent in the quarter ended Sept. 30, and 4.2 percent for the nine-month period of this year.
Earnings before interest, taxes, depreciation and amortization, known as EBITDA, increased 4.6 percent for the third quarter, and 10.3 for the nine-month period. Same store leased percentage was 96.7 percent at quarter end.
GGP said initial rental rates for signed leases that have commenced in the trailing 12 months on a suite-to-suite basis increased 12 percent when compared to the rental rate for expiring leases.
Tenant sales (not including anchor stores) increased 1.4 percent on a trailing 12-month basis.