FUND MAY SELL STAKE IN MALL OF AMERICA
Byline: Valerie Seckler
NEW YORK — Teachers Insurance & Annuity, the nation’s biggest pension fund, said Monday it is in talks to determine if it will sell its 55 percent stake in Mall of America, the largest shopping center and top tourist attraction in the U.S., located in Bloomington, Minn.
“We had some expressions of interest, and when we considered the market conditions, we decided it was time to shop it,” said a spokeswoman for the Teachers Insurance & Annuity Association College Retirement Equities Fund, based here.
“We may or may not sell the whole stake,” the spokeswoman noted. “We’re under no pressure, and we are testing the waters under what appear to be very favorable circumstances.
“The demand for real estate is creating attractive prices, and Mall of America is doing very well,” she said.
The retail and entertainment complex bowed in the Minneapolis suburb of Bloomington in August 1992.
A Mall of America spokeswoman said Monday that the center’s “growing” traffic and “strong” sales have mall management contemplating an expansion that would nearly double the size of the 4.2 million-square-foot property, which houses 2.57 million square feet of gross leasable area.
“We’re talking about a potential phase two on adjacent property, and we’re thinking of launching the project over the next two to four years,” the spokeswoman offered. “We’re now in talks over the land.”
She added, however, that the Minneapolis-St. Paul International Airport is considering a runway expansion that could “jeopardize” the Mall’s access to the property.
Teachers made a loan in early 1992 that helped finance construction of the mall, and in September of that year the pension fund purchased its 55 percent equity stake in the project. Teachers, which manages roughly $230 billion in assets, has invested about $650 million in Mall of America, the fund’s spokeswoman said.
“The return on our investment has been positive, and we may or may not sell any of our stake,” she added.
Teachers declined to name any parties eyeing a piece of the massive complex. Sources speculated that a likely contender is Simon DeBartolo Group Inc., the Indianapolis-based owner and developer of shopping centers, which manages the property.
Melvin Simon, co-chairman of Simon DeBartolo, is also chairman of Melvin Simon & Associates, a closely held investment firm that helped develop Mall of America and still has a 22.5 percent stake in it.
The remaining 22.5 percent interest in the mall is controlled by Triple Five Corp., a Canadian developer.
A spokeswoman for Simon DeBartolo said Monday it is the company’s policy to decline comment on “acquisition rumors.”
“Typically, we don’t comment on individual properties at all, but certainly we are pleased with Mall of America,” the DeBartolo spokeswoman added.
According to a spokeswoman for the mall, sales produced by its tenants grew 6.2 percent to $770 million last year, from $725 million in 1996, as 43 million people visited the complex, up from 42 million. She projected sales will expand 7 percent this year, to around $824 million. The mall is anchored by Nordstrom, Bloomingdale’s, Macy’s and Sears.
Calling Mall of America a “high-glitz, trophy property,” John Konarski, vice president of the International Council of Shopping Centers, said, “I expect a lot of maneuvering as Teachers shops its stake, and it won’t go cheap. Mall of America stands alone among shopping centers, like Disney stands alone in theme parks. It’s the sheer scale of the project, as well as the amount of entertainment in one place.
“It has people flying in from Japan,” Konarski added, “to go shopping in Minnesota.”
