CBL & Associates Properties, Inc. (NYSE:CBL) today announced it has acquired the Monroeville Mall in the eastern Pittsburgh suburb of Monroeville, PA from Turnberry Associates. The acquisition included the mall, an associated center known as the Annex, and an open-air expansion known as the Village all of which are situated on leasehold land.
The consideration for this acquisition is $231.2 million and is expected to generate an initial yield for the mall and associated center of 7.37% based upon current income. An additional $20.7 million will be invested for the open-air expansion, which is expected to yield 8.18% when it opens in mid-2005. The combined return for the entire project is expected to be 7.45%.
The purchase price is comprised of the assumption of a $134.0 million fixed-rate, non-recourse loan that matures in 2013 and bears interest at a rate of 5.732%; $36.25 million in cash, including closing costs; and the issuance of 780,470 SCUs (special common units) of CBL's Operating Partnership with a par value of $60.95 million, or $78.10 per unit. The SCUs will be entitled to receive an initial annual dividend of 6.5% and will be exchangeable on a one-for-one basis for shares of CBL's common stock. CBL also obtained an option to purchase the fee interest in the property that can be exercised anytime after three years for $10 million and can be paid either in cash or SCUs at the election of CBL.
The 1,128,747-square-foot Monroeville Mall is currently 93% occupied with 12-month average mall shop sales of $365 per square foot; the 229,588-square-foot Annex is 100% occupied; and the 86,204-square-foot Village, which is currently under construction, is 50% leased. Monroeville Mall is located in the easternmost section of the metropolitan Pittsburgh area, 12 miles east of the central business district.
"Monroeville Mall has been the mall of choice in the eastern Pittsburgh area for many years," said Stephen Lebovitz, president of CBL & Associates Properties. "With recent upgrades, a strong re-merchandising effort and a new and exciting open-air expansion under development, Monroeville Mall will continue to dominate its marketplace. The Monroeville Mall complex is similar to others in our portfolio, and we expect to leverage its competitive position with aggressive leasing and marketing."
Built in 1969, Monroeville Mall has been expanded and renovated numerous times, the most recent of which was completed in 2003 with a $10 million investment to upgrade the mall decor and install new air chillers. The two-story mall is located on approximately 169 acres on the south side of William Penn Highway one-half mile south of I-376 and two miles west of the Pennsylvania Turnpike (I-76). CBL's Westmoreland Mall is located approximately 45 minutes east of the property. JCPenney, Kaufmann's and Lazarus anchor Monroeville Mall with more than 180 additional retailers totaling 443,000 square feet of mall shop space. The Annex is anchored by Best Buy, Burlington Coat Factory, Dick's Sporting Goods and OfficeMax. The Village will feature a Barnes & Noble, leading national and regional restaurants and boutiques offering Monroeville Mall customers an open-air streetscape shopping experience located at the main entrance to the mall.
CBL & Associates Properties, Inc. is one of the top five owners of shopping centers in North America and the largest owner of malls and shopping centers in the Southeast, ranked by GLA owned. CBL owns, holds interests in or manages 167 properties, including 67 enclosed regional malls. The properties are located in 27 states and total 69.1 million square feet including 2.0 million square feet of non-owned shopping centers managed for third parties. CBL has nine projects under construction totaling approximately 2.0 million square feet including one regional mall - Imperial Valley Mall in the Imperial Valley region of California, an open-air shopping center in Southaven, MS, one community center and six expansions. In addition to its office in Chattanooga, CBL has a regional office in Boston (Waltham), MA.