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Mega mall mergers mark consolidation within the retail sector

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GGP takeover indicates value of consolidation in retail

As traditional retail struggles to compete with online, two big mergers of mall owners point to the benefits of consolidation.

GGP Inc., the second-largest U.S. mall landlord, is to be taken over by a unit of Toronto-based Brookfield Property Partners (BPR), reports Bloomberg, in a deal estimated at $15 billion.  This follows the acquisition of Australia’s Westfield Corp by Unibail-Rodamco SE in 2017.

The combined GGP and BPR conglomerate will be one of the world’s largest commercial real estate enterprises with $90 billion in total assets and annual net operating income of more than $4 billion.

“Consolidation is happening because prices have fallen below the asset values.  If you believe that malls are not dying, you’re buying assets at a discount that will have value into the future,” says Lindsay Dutch, an analyst with Bloomberg Intelligence.

Retailtainment could be one of the options for landlords looking to add experience elements to extend the appeal of malls.  Other tactics include repurposing malls as commercial and residential properties.

In an interview with Blooloop, President of Triple Five Don Ghermezian predicted a contraction in retail space in the US.  In order to stay in the game malls should look to follow the Triple Five’s example of investing in entertainment options.

“I think, quite frankly, that the United States is ‘over-malled’. There are still several hundred malls that need to shut and that will shut in North America over the coming years. However there will always be the strong, true, AAA centres that have embraced the ideas that we put out there. They will always be successful. I think the demise of the B and C class centres is long overdue. Ultimately that will leave a smaller and stronger group. We plan to have four of our centres at the top of that group.”

Image: GGP

https://www.bloomberg.com/news/articles/2018-03-27/mall-mergers-accelerate-with-brookfield-property-s-buyout-of-ggp

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Rachel Reed

Rachel Read

Rachel is Finance Director. She has a degree in engineering from Cambridge University and qualified as a Chartered Accountant at Deloittes in London. She worked in finance in industry for twenty years. She oversees our news and also manages our events.

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