news-record.com

GREENSBORO — It comes as little surprise that CBL & Associates Properties would want to add Friendly Center to its stable of malls and major retail.

The Tennessee-based real estate company, which owns four major Triad retail centers, has a history of dominating markets such as Greensboro through building and buying enclosed malls and outdoor shopping centers.

By picking up Friendly and the neighboring Shops at Friendly Center from local developer Starmount Co., CBL would have a near-lock on large-scale shopping in the Triad.

That's the way national mall owners like it.

"They try to be the only game in town," said Jeffrey Spector, a real estate investment analyst with financial services firm UBS.

Neither CBL nor Starmount has made any statement about a deal. But sources close to the negotiations said this week that CBL has a contract to buy Starmount's commercial holdings — a dozen shopping centers and more than 20 offices. An announcement about the sale, reportedly worth more than $600 million, could come before the end of the year.

Officials with CBL declined to comment about any potential deal Friday, as did Starmount President Coolidge Porterfield.

Starmount put its properties up for sale in April with an announcement that the company would focus on building new projects instead of running old ones. The decision to sell was driven by members of Friendly's founding family, the Benjamins, who have a presence on the private company's board.

Though local players made bids, the portfolio was almost certain to go to a national company such as CBL from the outset, said Jeff Nimmer, leasing manager at Kotis Properties in Greensboro .

"The whole reason that Starmount is looking to unload their portfolio is to get the maximum amount of money they can in a good seller's market," Nimmer said Friday.

If the deal goes through, CBL will add Friendly and the Shops to its collection of about 80 malls and major retail centers, including Oak Hollow Mall in High Point , Hanes Mall in Winston-Salem , Randolph Mall in Asheboro and Alamance Crossing , an outdoor shopping center that opened in Burlington this summer.

Friendly likely would get some renovations. And CBL could use its clout with national retailers to fill any empty spaces.

"Some of the first initiatives that a CBL would take, of course, is analyze their current tenant roster, try to remove the weaker tenants," said Spector, who would talk about CBL generally but declined to comment on the potential deal with Starmount.

The greatest change, though, is likely at Starmount's smaller retail centers and offices. Jeff Donnelly, a managing director for Wachovia Capital Markets, said he would expect CBL to hand off the offices, either by partnering with another company in the deal with Starmount or putting the offices back on the market after the deal closes.

CBL has small shopping centers in Arkansas , Georgia, Oklahoma , Tennessee and Texas, but that doesn't mean the company will keep aging centers such as Brassfield. More likely, Nimmer said, CBL would sell off those properties to a buyer willing to make renovations and find new tenants.

Even without the strip centers and offices, CBL would have a grip on the region with malls or major retail centers in five Triad cities. "It's probably, in sheer number of properties, going to end up ranking as one of their more densely owned markets," Donnelly said.

It wasn't long ago that CBL was struggling to gain a hold here. It took the company seven years to open Oak Hollow in 1995 . The mall, which residents worried would bring pollution to a nearby lake, cost nearly $75 million. Five years later, CBL picked up Hanes and Randolph malls as part of a $1.2 billion deal.

Oak Hollow was 87 percent leased at the end of last year. Hanes was 96 percent leased, and 97 percent of the space at Randolph was accounted for, according to company filings.

Contact Michelle Jarboe at 373-7075 or mjarboe@news-record.com