Wednesday, April 6, 2022

Montgomery Mall owner extends target date for sale of property to 2023

Unibail-Rodamco-Westfield stunned many in the retail and real estate field last year, when it announced it planned to sell all of the U.S. malls it had just obtained when it acquired Westfield, including Montgomery Mall and Wheaton Plaza. It set a target date of December 31, 2022 for unloading the properties, so it could focus again on its European holdings. With buyers so far not making offers Unibail finds acceptable, its CEO informed investors last week that the deadline for completing the selloff is now the end of 2023.

Getting the full value of that portfolio was already going to be a challenge amidst the pandemic. But at least one expert is now questioning the wisdom of Unibail's openness in publicly announcing it wanted to quickly divest itself of the malls, and setting a relatively short deadline in the first place. "Who is the buyer in the U.S.?" Green Street senior analyst Rob Virdee asked the Wall Street Journal. "If the bidder knows you're on the run and you have to make a sale, they're not going to offer you a good price."

How did Unibail end up having to switch gears so quickly, and in the position of essentially announcing a fire sale? The Wall Street Journal explains that the firm took on tremendous debt to acquire the Westfield properties. Activist investors who seized control of Unibail's board two years after the Westfield deal were angered about that debt, and once in charge, abruptly directed that the company sell the malls to reduce it.

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