For Sale: Baltimore’s Harborplace, Gallery on market

“Clearly, Harborplace is one of our most important assets — no one should ever understate its importance to the city,” said Kirby Fowler, president of Downtown Partnership of Baltimore.

Harborplace, pioneered by Baltimore developer James Rouse and the Rouse Co., opened in 1980 and symbolized Baltimore’s downtown transformation along the Inner Harbor. The marketplace was at the center of Baltimore’s makeover and turned the city into a tourist destination. The Gallery opened in 1987.

“It brought us international publicity,” Fowler said. “Harborplace has become symbolic of Baltimore.”

Andrew Frank, Baltimore’s first deputy mayor for neighborhood and economic development, in an e-mail said the mayor’s office learned of the potential sale Wednesday.

“There are only a handful of commercial buildings in Baltimore City that have the strategic and symbolic importance as Harborplace, which is at the center of gravity for Baltimore’s hospitality and tourism industry,” Frank said.

“We are confident that General Growth Properties understands that the future owners of Harborplace & The Gallery must carry on the tradition of operating these properties at the highest possible standards.”

Harborplace & Gallery management declined to comment Thursday on the potential sale.

David Keating, GGP spokesman, in an e-mail said, “Harborplace is among a group of properties for which General Growth is seeking partners, investors or buyers. This is a part of our company’s effort to reduce debt and improve our balance sheet.”

‘An icon of the city’
Fowler acknowledged the sale announcement “creates some uncertainty” but added the city has “been through this before.” GGP purchased the Rouse Co., which had owned the Inner Harbor properties, for $12.6 billion in 2004.

“These are top-tier assets in great locations,” Fowler said. “I think they’ll attract significant interest from buyers.”

Local retail experts had speculated over the potential sale of some of GGP’s Maryland properties since September, when the company said it was considering asset sales to raise capital and boost its tumbling stock price.

The potential sale of Harborplace & The Gallery, though, instead of other Maryland shopping centers like Owings Mills Mall, surprised Tom Saquella, president of the Maryland Retailers Association.

“Harborplace has become an icon of the city. It symbolized the renaissance brought on by [former Maryland Gov. William Donald] Schaefer,” Saquella said.

“The sale isn’t the end of the world, and people might be concerned, but it might end up being for the better with a new owner,” Saquella said.

GGP’s debt obligations
DTZ Rockwood LLC, a New York City-based real estate investment firm, has been retained to manage the sale of GGP’s Festival Marketplace portfolio, which includes Faneuil Hall Marketplace in Boston and the South Street Seaport in New York City, in addition to the Inner Harbor properties. GGP is also trying to sell the Village of Cross Keys in North Baltimore.

“It looks like they’re getting rid of their urban properties,” Saquella said. “They’ve always been more of a suburban mall owner.”

Harborplace & The Gallery is a 544,453-square-foot, multiuse property with nearly 285,000 square feet of retail space and 260,000 square feet of office space.

The property’s retail occupancy is about 86 percent and generated nearly $114 million in retail sales in the 12 months ending Sept. 30, according to marketing materials from DTZ Rockwood.

In addition to the $900 million in debt that comes due in February, GGP has another $3.1 billion in debt that matures in 2009.

The company’s debt obligations increase in future years, growing to $3.9 billion in 2010 and $7.3 billion in 2011, according to Todd Lukasik, an analyst who covers GGP for Chicago-based Morningstar.

“It will be very difficult, if not impossible, to raise enough capital to meet all of those obligations in the current environment,” Lukasik said.

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