A large D.C.-area retail property is about to welcome new owners. Pennsylvania Real Estate Investment Trust (PREIT) announced on March 3 that it has entered into an agreement with Vornado Realty Trust to buy the Springfield Town Center in Springfield, Va. The price of the transaction is huge, at $465 million.
The deal calls for Vornado to receive $340 million in cash and $125 million in PREIT operating partnership units, making the New York-based firm a passive investor in PREIT. According to a press release, Vornado will be subject to an equity ownership limit of 9.9 percent and a standstill agreement. BofA Merrill Lynch and Wachtell, Lipton, Rosen & Katz advised PREIT in the transaction. The deal is expected to close no latter than March 31, 2015.
Springfield Town Center first opened in 1973 as Springfield Mall. The 1.4 million-square-foot mall is located at the intersection of I-95, I-395 and the Capital Beltway in Fairfax County, one of the wealthiest counties in the United States. The property features 642,000 square feet of anchor space and 703,000 square feet of non-anchor space. PREIT announced that the non-anchor space is currently 30 percent leased to such notable retailers as Michael Kors, H&M, Chico’s, Pandora, Francesca’s Collection, Maggiano’s Little Italy, Yard House Restaurant, Wood Ranch BBQ, LA Fitness, Regal Cinema, Dick’s Sporting Goods and Topshop. More than 175,000 square feet of additional leases are currently being negotiated. The property is anchored by Macy’s, Target and JCPenney.
Springfield Town Center is currently undergoing a redevelopment project. Vornado started the project in 2012. The mall’s grand re-opening is scheduled for Oct. 17, 2014.
PREIT’s CEO, Joseph Coradino, said the transaction is “transformative for PREIT in our evolution into a quality mall owner with a strong presence in major markets.” He added that “the opportunity to acquire a property of this caliber is rare, and in light of having achieved balance sheet and operational stability and divested several of our lower-quality malls, we are well positioned to leverage PREIT’s value creation capabilities to realize this asset’s potential.”
According to the deal, PREIT also has the right to develop the land surrounding the mall. Existing zoning allows for the construction of 3 million square feet of retail, residential, office and hotel space.
Photo credit: www.springfieldtowncenter.com