Shopping Center Business

DEC 2016

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

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ROUSE 86 • SHOPPING CENTER BUSINESS • December 2016 T he Rouse Company, named for re- nowned developer James Rouse, built malls and planned commu- nities for decades until the company was sold to General Growth Properties in 2004. GGP spun off Rouse Properties, as well as the Howard Hughes Corp., into publicly traded REITs in 2012. In July, it was announced that a new own- er, Brookfield Asset Management, would take Rouse Properties private and operate it through its BSREP II fund. Brookfield is a global asset manager valued at approxi- mately $250 billion. Now backed by a leading blue chip part- ner, Rouse Properties is revving up to do more of what it does best: translating po- tential into performance in malls and cen- ters that call out for capital investment. Converting a large mall property flanked by vast parking lots into a buzz- ing, relevant destination is not a task for the faint of heart. So Rouse is rising to the challenge backed by strong relation- ships with retailers and now the capital resources to expand into coastal markets where population and income figures out- number local en-vogue retail, dining and entertainment destinations. Rouse enacts a value-add strategy to generate increased retail sales and asset performance primarily in two ways — ei- ther by demolishing and rebuilding with updated tenants or by simply tightening up a leasing program. While the company has 36 malls or centers in 22 states, its new acquisition focus will be directed toward the coasts. In fact, Rouse just closed on the $42 mil- lion Shops at Somerset Square in Glaston- bury, Connecticut, an affluent area eight miles southeast of Hartford and Rouse's first property in the Northeast. The 115,000-square-foot lifestyle center sits in a trade area of approximately 372,400 people with an average yearly income of $104,600. Existing retailers include Chi- potle Mexican Grill, Starbucks Coffee, Francesca's, Victoria's Secret, Chico's, Talbot's, White House Black Market as well as office and medical space. The center is also not far from several Class A office buildings and hotels. Rouse's portfolio and transaction data speak to its strategy of repositioning un- derperforming assets. The Shoppes at Knollwood in St. Louis Park, Minnesota, is a past example of Rouse's hands-on ap- proach. Knollwood was built in 1955 as a strip mall and later became an enclosed A Visionary Turn Pedigreed mall owner Rouse Properties goes private with a hearty appetite for repositioning shopping centers on prime real estate. Randall Shearin and Lynn Peisner The Shoppes at Carlsbad is an example of Rouse's coastal strategy. The 1 million square foot site was purchased in 2015 from Westfield for $170 million. Rouse is moving forward with a renovation that will create streetscapes and enhance the site's entertainment, dining and destination qualities. The renovation will be complete in 2017. Rouse redeveloped the Shoppes at Gateway in Springfield, Oregon, creating a strong center for an underserved market.

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