The Nation’s Premier Retail Operating Group Enters Exclusive Negotiations to Operate Eight Million Square Feet Across Seven Regional Malls in the Largest Mall Transaction of 2020
LOS ANGELES – (SEPTEMBER 25, 2020) – Golden East Investors (GEI) in partnership with Pacific Retail Capital Partners (PRCP) were selected by the Trustees of Starwood West Limited to lead exclusive negotiations with senior lenders to the US subsidiaries of Starwood West Limited, owners of seven regional malls comprising approximately 8M square feet, on behalf of holders of 910 million Israeli shekel (ILS) denominated (approximately US$250 million) bonds issued by Starwood West Limited. The centers are all well located commercial real estate properties in substantial markets and offer the opportunity to improve performance through a program of active management, capital improvements, local activations and community focused leasing. GEI/PRCP and Starwood West Limited have agreed to negotiate a management agreement for the operation of the malls.
“GEI has been tracking this issuance since origination and is excited to be involved in one of the first and largest ILS Bond restructurings”, said Joshua Blisko, Advisor to GEI.
“This would represent the largest shopping center transaction to date in 2020 and certainly since the start of the global pandemic”, said Steve Plenge, Managing Principal for Pacific Retail Capital Partners.
The agreement with Starwood West Limited mandates GEI and PRCP to exclusively negotiate on behalf of the ILS bondholders to resolve current issues with the senior debt, stabilize the assets, maintain and create value, and position the properties for potential future sale.
In March 2020, S&P Maalot downgraded the ILS bonds of Starwood West Limited below ilBBB+, triggering an event of default and subsequent acceleration vote by ILS bondholders in May 2020. On July 1, 2020, pursuant to an order of the District Court of Tel Aviv, temporary trustees were appointed to manage the estate of Starwood West Limited on behalf of ILS bondholders and solicit formal restructuring proposals. The complementary partnership of GEI and PRCP combines deep knowledge of distressed debt and CMBS structures with a successful track record in turning around distressed retail centers.
“A $1 billion capital stack comprised of approximately $780 million in senior debt across three separate lender groups combined with ILS corporate bonds of approximately $250 million requires deep expertise in creating value for stakeholders through the resolution of complex capital structures,” said Travis Goad, founder of TG Capital Advisors and Principal at GEI. “The GEI team is uniquely qualified to navigate the capital structure and asset management of these assets. Our partnership with Pacific Retail will bring best-in-class property and asset management to drive value creation.”
“These properties are all prime examples of retail centers that serve a vital need in the community and will benefit from the tailored management approach that is a hallmark of Pacific Retail. We have the knowledge, expertise, and work ethic to make real change in these shopping centers quickly. This is what Pacific Retail is known for, and the size of this transaction only makes the challenge more exciting for our seasoned team, many of whom have a history working on these assets in the past. We look forward to building relationships and bringing new life into each of these properties so they can thrive with upgraded shopping experiences and activations,” said Plenge.
The portfolio is comprised of seven regional centers in California, Indiana, Ohio and Washington, including:
- Belden Village Mall in Canton, Ohio – 829,000 square feet
- Capital Mall in Olympia, Washington – 802,000 square feet
- Great Northern Mall in North Olmsted, Ohio – 1.18 million square feet
- Parkway Plaza in El Cajon, California – 1.32 million square feet
- Southlake Mall in Merrillville, Indiana – 1.36 million square feet
- Plaza West Covina in Covina, California – 1.21 million square feet
- Franklin Park Mall in Toledo, Ohio – 1.31 million square feet
“We appreciate the trust and confidence that the Trustees of Starwood West Limited have placed with GEI and PRCP to negotiate on behalf of ILS bondholders. Our team’s ability to navigate challenging situations and formulate creative strategies while working with transparency and alignment of interests with various stakeholders will seek to maximize the value of the Starwood West Limited estate”, said Uri Ben-Ezer, Principal at GEI.
“Upon consummation of the transaction, Pacific Retail’s experienced team will be deployed to evaluate each asset in the context of the neighborhood and what is valued by the customers to create a program to further enhance its appeal. This may include bringing in new uses, improving the physical space, adding programming and in some cases, master planning for the real estate,” says Najla Kayyem, senior vice president of marketing for PRCP. “It does not matter to us what stage a center is in when we get our hands on it. Shopping centers, in general, must evolve to survive in the world we live and shop in today, and we are the ones who can strategically plan and execute on that vision. Our strategies shifted long before the pandemic occurred, and we have been able to stay ahead of the curve due to our approach.”
PRCP is nationally known as a leader in reinventing and revamping the traditional shopping center experience by incorporating a thoughtful mix of uses and master planning assets for highest and best use. With more than $2 billion in retail assets presently under management in the U.S., the company excels in identifying centers with strong fundamentals in well-performing markets and transforming them into higher quality assets through active management and redevelopment.
Any transaction will be subject to final documentation, the approval of Starwood West Limited’s creditors, including the senior lenders and the ILS bondholders, as well as the District Court of Tel Aviv overseeing the restructuring process of Starwood West Limited in Israel.
About Golden East Investors
Golden East Investors (GEI) is a national real estate investment firm located in New York City. The Company is a vertically integrated organization that is a leader in the acquisition, development, construction, and management of commercial real estate. Founded in 1980’s, the Company has successfully navigated several market cycles, demonstrating program flexibility and disciplined investing. The Company has acquired and repositioned under-performing assets and profitably executed value-add strategies. In addition to its traditional investment objectives, GEI strives to maintain a competitive edge in the marketplace while balancing environmental, economic, and social objectives.