Starwood Capital Group missed as many as four payments on a $549 million commercial mortgage-backed security it used to buy a distressed group of seven malls in 2013 and, as a result, has lost five malls in an open bid. Starwood was one of the six bidders.
The winner was a partnership between Pacific Retail Capital Partners and Golden East Investors. The new owners say they will reposition the malls as mixed-use properties.
“There is great familiarity with these assets and we see value. These assets will be survivors,” Pacific Retail managing principal Steve Plenge told The Wall Street Journal.
The malls surrendered by Starwood are located in Los Angeles; San Diego; Olympia, Wash.; and Toledo and North Olmsted, Ohio.
J.C. Penney, which filed for bankruptcy protection in May, was an anchor at all five locations. Sears, another Chapter 11 filer, was a tenant at three.
Starwood still owns more than 20 malls. Retail makes up a small portion of the company’s $60 billion real estate portfolio.