Sunday, February 13, 2011

Arizona Center marketed for sale

General Growth Properties, which emerged from Chapter 11 bankruptcy protection in November, has put its high-profile Arizona Center development in downtown Phoenix on the block and could announce a buyer by March.

The company declined to discuss the possible sale but its Chapter 11 reorganization note said it intends to focus on its regional malls going forward and shed properties, such as the mixed-use Arizona Center, that don't fit the criteria.

The company earlier transferred its 355,000-square-foot Park West Mall in Peoria to its planned community development arm, the Howard Hughes Corp., which was spun off to stockholders in November.

General Growth plans to retain the Mall at Sierra Vista in Sierra Vista and the Tucson and Park Place malls in Tucson, which are traditional regional malls.

The 18.5-acre Arizona Center consists of roughly 800,000 square feet of offices in two high-rises; 160,000 square feet of retail space, including an AMC Theatre complex, and a covered parking garage.

The Arizona Center is technically owned by the city of Phoenix, which leases it to General Growth for a nominal sum under a government property-lease excise tax, or GPLET, agreement. The deal allows the Arizona Center to pay substantially lower property taxes because it is technically a government-owned property. The project is zoned for an additional 1.1 million square feet of offices, a 600-room hotel and 400,000 square feet of retail shops.

General Growth Properties also is a part owner with Westcor parent Mecerich Co. in Arrowhead Towne Center in Glendale and Superstition Springs Center in Mesa.

A buyer that has been mentioned for the 1.06 million-square-foot Arizona Center is the CommonWealth REIT of Newton, Mass. The real-estate investment trust has $6.7 billion worth of office and industrial properties in its portfolio, including six properties in Arizona, totaling about 925,000 square feet. They include Regents Centre in Tempe, the Blue Cross/Blue Shield building in Phoenix and the One South Church Avenue office building in Tucson.

The company also declined to discuss the possible Arizona Center acquisition.

The Arizona Center was developed by high-profile mall developer Rouse Co., whose projects include Faneuil Hall Marketplace in Boston and Harborplace in Baltimore.

When it opened in 1990, it was touted as a retail and entertainment magnet that would draw people to downtown Phoenix and jump-start redevelopment of the central Phoenix business district. The city of Phoenix contributed the land, then worth about $8 million, and granted the developer $40 million in sales-tax rebates.

But, the center never lived up to its grand potential. National retail stores such as Gap and Foot Locker eventually closed and were replaced with tourist-oriented shops and restaurants. In 2003 the mall's food court closed and was converted into office space.

General Growth acquired the Arizona Center in 2004 through its $12.6 billion acquisition of Rouse. The company filed for Chapter 11 protection in April 2009.

by Max Jarman The Arizona Republic Feb. 13, 2011 12:00 AM

Arizona Center marketed for sale

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