Shopping Center Business

MAY 2015

Shopping Center Business is the leading monthly business magazine for the retail real estate industry.

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136 • SHOPPING CENTER BUSINESS • MAY 2015 ter was originally created with a JC Penney at one end and another department store at the opposite end. An addition was later added so that JC Penney sat in the middle of the center, with Macy's anchoring one side and Sears the other. Visitors had to walk through JC Penney to get to another side of the mall. After acquiring the cen- ter, Starwood cut a deal with JC Penney to build a new store behind its current store so it could create a new center court for the mall where JC Penney formerly stood. "We have effectively unlocked the value of 50 percent of the mall," says Ball. "When we are done with this renova- tion, it will be a completely different mall," adds Wolstein. At Wellington Green in South Florida, an area that was created as a furniture dis- trict — anchored by three furniture stores clustered together — is being revised to make room for a new area of retail. Star- wood negotiated with City Furniture, the master tenant, to reclaim over one-third of the space and build a new movie the- ater in its place. Starwood is also adding restaurants around the theater. At Westland Mall, in Hialeah, Florida, Starwood has upgraded the tenant mix, adding a number of national tenants that were not present in the market, while simultaneously renovating the mall's en- trances and food court. Starwood starts the conversation with tenants during its due diligence period, to see what they think about the property. It works with many tenants to determine which opportunities they are willing to discuss at each center. "We underwrite our acquisitions with capital that we are going invest after we buy the center," says Ball. "We go in with a plan. We are not just buying centers and figuring out solutions later. We are proactive on the front end, especially with the tenants." Even at centers where a renovation or major re-leasing is not needed, Starwood Retail has taken a look at what it can do to make the customer stop and have a "wow moment." At Louis Joliet Mall, Star- wood installed a dramatic technology fea- ture at its center court grand tree, where customers can tweet and send pictures to 40 floating boxes that broadcast images around the tree. At Southlake, Starwood is constructing a virtual stream through the center court where kids can create a vir- tual pet fish and set it loose in the stream. They also can save that fish and come back to visit it on the next trip. "It is great to do big redevelopments, but the reality is that it is the little things you do that the customer notices the most," says Paquette. "We've reinvested into the properties so that they look fresh on a day-in, day-out basis. Even painting and landscaping let the consumer know that we are paying attention." For its future, Starwood Retail sees more acquisitions, redevelopment and investment into better malls and lifestyle centers. Ground-up development is likely not in the cards. "I grew up in the development business, but I'm not a huge fan of ground-up devel- opment in the United States today unless it is part of a public/private partnership," says Wolstein. "To build a greenfield mall in a suburban location today is a five-year entitlement process at the minimum. You don't know what the end of that process is going to look like when you embark upon that process. By the time you get the site permitted, you may not want to build the project." The company will be growing in what is a relatively mature industry. It wants to do so by creating a great place to work, and by applying the combined vision of its experienced employees to a fresh van- tage point. "The Starwood brand is a worldwide brand," says Hense. "We are a start-up, but we are one that has a brand that is known. I also believe in our vision: this is not just a financial play where we are buying assets at a cap rate and looking for an exit at a compressed cap rate. We are improving these properties for the future and there is a long-term vision for improv- ing what we buy." SCB The Promenade at Bolingbrook in suburban Chicago is one of a handful of successful lifestyle centers that Starwood has purchased. Though it is the top mall in its trade area, Starwood is reinvesting in Rim Rock Mall in Billings, Montana, to create better space for tenants and shoppers.

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