Valley Fair, Oakridge owner seeks to slash holdings
SAN JOSE >> The principal owner of the big Westfield Valley Fair and Westfield Oakridge malls in San Jose is eyeing a potential exit from its properties in the United States as it attempts to combat a brutal coronavirus-linked erosion of its retail operations.
Unibail-rodamcoWestfield, a France-based owner of malls worldwide, disclosed the latest potential jolt to the Bay Area retail market in a conference call to discuss the company’s most recent financial results.
“We are implementing a program to significantly reduce our U.S. footprint once the investment markets reopen, which should happen as soon as the economy rebounds,” JeanMarie Tritant, chief executive officer of Unibail-rodamco-westfield, said during the call.
Despite the grim landscape for brick-and-mortar stores, the company noted that big-time retailers continue to open at its malls, including Westfield Valley Fair.
“In March before COVID, we completed the first phase of the Valley Fair expansion in San Jose with the opening of Bloomingdales,” Tritant said during the call. “This was followed by, among others, the Gucci store in September, and the Apple flagship store in October.”
The shopping mall giant also intends to slash its debt and made it clear that once that process is complete, it will undertake a more targeted geographic approach.
“We will be focused on Europe,” Tritant said.
The company’s sales of retail complexes in the U.S. is already underway and will continue into 2022.
“We will initiate the program to dispose of U.S. assets starting in 2020,” Tritant said. “By the way, we did it already with some small assets.”
Every approach appears to be on the table to chop the company’s ownership of malls in the United States, Unibail-rodamcoWestfield executives said.
During the conference call, company executives made it clear that the sale of malls in the United States is a crucial component in the quest to deleverage — sharply reduce debts through property dispositions.
“We will fully deleverage the company through U.S. asset disposals,” Tritant said. “We will deleverage the company through proceeds coming from the U.S.”
The company noted that expansion projects can contribute to vacancy problems in the portfolio.
“The expansion of Valley Fair is a part of the vacancy,” Tritant said. “To give you an example, we moved the Apple store, which was a relatively small size, to open the Apple Flagship store which is a large store in that expansion. That creates an additional vacancy.”
Unibail-rodamco-westfield executives made it clear that the brutal retail environment that was unleashed by the coronavirus has yet to improve markedly.
“2020 has seen the toughest operating environment in living memory and the impact continues into 2021,” said Fabrice Mouchel, the company’s chief financial officer.
Valley Fair and Oakridge are deemed to be top-notch malls in the Bay Area and the United States.
As a result of that status, it’s entirely possible the San Jose malls could be jewels that could fetch a commanding price in an asset sale.
Unibail-rodamco-westfield made it clear that there is a good chance it won’t own any U.S. malls by the time one to three years have passed.
“At the end of the day, exposure to the U.S. will be minimal if not zero,” Tritant said.
Contact George Avalos at 408-859-5167.