The Southlake Mall in Hobart, which at one time was the largest mall in Indiana, has been sold and will be placed under new management.
Australian-based shopping center giant Westfield Group announced it sold the 1.3 million-square-foot super regional mall at U.S. 30 and Mississippi Street as part of a strategy to improve its profitability. Westfield is dumping non-core malls to raise money for projects in major cities, such as retail space it is developing in the new World Trade Center in New York City.
Westfield currently is pumping billions of dollars into retail projects in metro areas of major cities, including Sydney, Milan and Washington, D.C.
Southlake was sold -- along with six other malls -- to an affiliate of Starwood Capital Group for $1.64 billion. Starwood is a privately held global investment firm that owns malls, offices, condo towers, hotels and beach resorts.
The Connecticut-based firm manages $29 billion of assets and is helmed by hotel magnate Barry Sternlicht, who is best known for having previously run Starwood Hotels and Resorts Worldwide. That company, which is no longer affiliated with Starwood Capital, runs upper-crust hotels such as St. Regis, Sheraton and Westin.
Starwood Capital Group spokesman Tom Johnson said the investment group would not comment on its future plans for the mall in Hobart until after the deal closed, which is expected to happen sometime in the fourth quarter of this year.
Last year, Starwood bought seven U.S. malls from Westfield for $1 billion. Westfield also sold off half stakes in six shopping malls in Florida to another company.
Under the new deal, Starwood will buy malls in Ohio, California and Washington, in addition to Southlake, according to a news release. More than 7.9 million square feet of retail space will trade hands.
Westfield will keep a 10 percent ownership stake in the malls, including Southlake, but Starwood will own and manage them when the transaction closes later this year.
The malls had been valued at $120 million more than the $1.64 billion sales price at the end of last year, but that sales price reflects their book values at the end of June.
"Today's announcement continues the implementation of our strategic plan, which positions (Westfield) to generate greater shareholder value," said Peter Lowy, co-chief executive officer. "We are focused on redeploying our capital into superior retail destinations in major cities through divesting non-core assets and introducing joint venture partners into our high-quality portfolio of assets."
Westfield, which is the largest mall operator in the world, bought Southlake from Cleveland-based Richard E. Jacobs Group in 2002. That deal was valued at $756 million.
The mall has more than 1.36 million square feet of retail space and is the second-largest mall in the state, barely trailing the Castleton Square Mall in Indianapolis. The Castleton mall on Indy's northeast side has 1.37 million square feet.
Local mall officials did not return calls as of Monday evening.
Southlake, which opened in the early 1970s, has a Merrillville mailing address but has actually been part of Hobart since the city annexed it in the early 1990s.
Anchor tenants include Carson Pirie Scott, J.C. Penney, Macy's Sears and Dick's Sporting Goods.