Prudential Selling Its Interest in 19 Malls, 9 in Southland

Prudential Insurance Co. of America agreed Wednesday to sell its interest in 19 shopping centers in six states--including nine in Southern California--to a group of investors in the United States and Australia.

The $1-billion deal would give the investors ownership of Prudential’s Centermark Properties Inc., which owns 11 malls and has a partial interest in eight others.

The malls originally were May Department Store centers that were sold to Prudential. They are located in and around Los Angeles; San Diego; Denver; Portland, Ore.; St. Louis; Washington, and Hartford, Conn.

Malls being sold in the Los Angeles area include Eagle Rock Plaza in Eagle Rock, Eastland Shopping Center in West Covina, The Plaza in West Covina and Topanga Plaza in Canoga Park. Malls sold in the San Diego area include Mission Valley Center East, Mission Valley Center West, North County Fair, Plaza Bonita and Plaza Camino Real.

Analysts said they expect similar sales as insurers and banks are pressured to reduce real estate holdings that have declined in value, as they earlier rid themselves of junk bond investments.

The buyers are General Growth Properties Inc. of Des Moines and Westfield Holdings Ltd. of Sydney, Australia, each of which would own 40% of Centermark. Whitehall Real Estate Limited Partnership III, a real estate investment partnership formed by New York securities firm Goldman, Sachs & Co., would own the rest.

Martin Bucksbaum, chairman of General Growth, said the investors would pay about $500 million in cash and assume about $500 million in mortgage debt.

The buyers would add the 16 regional shopping centers and three neighborhood strip malls to their already substantial real estate holdings.

General Growth is a real estate investment trust, a company that owns or manages properties in order to make a profit for shareholders. It owns 21 shopping centers in 15 states. Westfield operates 24 shopping centers in Australia and seven in the United States.

Centermark is based in St. Louis and would continue to manage the properties, Bucksbaum said.

Completion of the deal is subject to approval of the boards of each company. The parties hope to complete the acquisition by year’s end.

Prudential, based in Newark, N.J., had proposed selling the properties through a public stock offering. “Instead, they’re selling them to our group,” Bucksbaum said. “We see good potential in these shopping centers.”