General Growth Properties Inc. Chief Executive Officer Sandeep Mathrani said he’s watching rival mall owner Westfield Group’s planned sale of 17 U.S. properties before choosing a strategy for trimming his own company’s holdings.
"We want to evaluate what they do to decide in which direction we head," Mathrani said in an interview Thursday at a National Association of Real Estate Investment Trusts conference in New York. "We do want to pare down the number of assets we have."
Mathrani said that if Sydney-based Westfield sells properties at a capitalization rate of 7 percent, "I’m going to sell," and if it’s 9 percent, "I’ll re-evaluate." Capitalization rates fall as prices rise. The investment-yield measure is calculated by dividing net operating income by purchase price.
At General Growth, the second-largest U.S. mall owner, Mathrani has planned to sell $2 billion of office buildings, strip malls and lower-quality regional malls, and use a portion of the proceeds to pay down debt.
The company, which owns Ala Moana Center and Ward Centers, made $300 million of property sales since coming out of bankruptcy in November, and had an additional $387 million under contract for sale, Mathrani said on an April 27 conference call. General Growth planned $350 million in additional sales for the rest of the year, he said.
The mall owner is considering spinning off 35 properties into a real estate investment trust, Reuters reported June 3, citing people familiar with the plan.