By Matt Branaugh
Camera Business Writer

Broomfield's FlatIron Crossing mall, once considered by some as the final death knell for Boulder's Crossroads Mall, may now be Crossroads' saving grace after a billion-dollar acquisition announced Friday married the shopping centers under one owner.

Macerich Co. (NYSE: MAC, $28.55), which has spent months hashing out redevelopment plans with the city of Boulder for the half-empty Crossroads, will acquire Westcor Realty Limited Partners by shelling out nearly $1.5 billion.

The Santa Monica, Calif.-based company beat out at least 10 other bidders for privately held Westcor, a well-regarded Phoenix-based developer of shopping centers, including FlatIron Crossing.

Westcor's portfolio of malls, concentrated heavily in Arizona, made the deal attractive, said Art Coppola, Macerich's chief executive officer. Attaining FlatIron Crossing, he said, also sets the stage for a redevelopment at Crossroads complementary to the upscale shopping found in Broomfield.

"Owning FlatIron Crossing puts us in a better position to deliver a product at Crossroads," he said.

Westcor spent $220 million constructing FlatIron Crossing, a 1.5 million-square-foot mall that opened in August 2000. Its arrival helped speed the demise of Crossroads, which has seen major anchors leave, smaller tenants shutter and sales tax receipts dwindle down to a trickle.

During a conference call early Friday, Coppola told analysts and investors that the acquisition strengthens Macerich's commitment to the Boulder area.

"We think it's going to give us a tremendous edge in terms of the negotiating position that we have with Boulder, and we think it's going to give us a tremendous edge in terms of the human talent pool we'll be able to throw at Boulder," he said. "And we think that just having that much stronger presence in the community, with a strong management and regional team, is going to help us in getting things done there."

The city recently gave a preliminary green light to a redevelopment concept that mixes office and retail space, as well as open space, residential units and a grid of streets that don't yet exist.

In so doing, the city said it's willing to share a potential $80 million in tax revenue with Macerich so that the developer can begin work. Macerich continues reviewing the proposal.

After the call, Coppola emphasized Macerich's newfound abilities from owning both properties: Clauses excluding tenants from setting up shop at both sites will no longer exist. And the Westcor employees, long devoted to that company's specialty of developing new centers, can help resuscitate Crossroads.

While Macerich usually specializes in acquiring and redeveloping sites, Westcor focuses on new developments.

Hugh Crawford, FlatIron Crossing's general manager, will remain there. Several senior-level Westcor executives have agreed to stay up to three years for the transition, and the vast majority of Westcor employees will likely be kept, Coppola said.

Wally Chester, an executive vice president with Westcor, said the arrangement will keep Westcor as a wholly owned subsidiary of Macerich's. No in-depth discussions regarding Crossroads have started with Westcor's team, Chester said, but the urban village proposed by Macerich — one that could include a Wal-Mart — interests his team.

A hybrid of big-box retailers with existing anchors "is the way things are going anyway around the country," he said.

Built in 1963, Crossroads underwent a redevelopment in 1979. By 1988, Broomfield had identified FlatIron Crossing's future home as a potential regional mall site, raising discussions over the possibility of heavy competition.

When Dillard's couldn't come to Boulder in the mid-1990s, Macerich has said, it turned to Broomfield. Nordstrom followed, and the Broomfield mall quickly became reality.

The results, particularly in the last two years, have been dramatic. After Broomfield became its own city and county, and the economy locally and nationally sank, FlatIron Crossing generated $2.6 million of Broomfield's $7.2 million in first-quarter sales tax, although a portion of that goes back to Westcor for fronting infrastructure costs.

Meanwhile, Crossroads brought in $335,636 of Boulder's $17 million in sales and use tax receipts. The mall's receipts alone are down nearly 41 percent compared with 2001.

Rumors of Westcor's availability swirled for months, picking up steam as negotiations took place during an industry convention last week. Originally, Westcor appeared only interested in parting with a piece of the company. But Chester said once negotiations started with Macerich, it made sense to sell it all.

Macerich will assume $733 million in Westcor's existing debt and will issue $80 million in convertible preferred operating units to help pay for the deal. The company will give updated financial guidance after the transaction closes in third quarter.

Through the deal, Macerich will own 55 regional malls and 21 community centers measuring a total of 57 million square feet.

Contact Matt Branaugh at (303) 473-1363 or branaughm@thedailycamera.com.

June 1, 2002

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