While most retail real estate firms were crossing their fingers that last-minute shoppers would help salvage a weak holiday season, The Macerich Co. was doing some shopping of its own. On Dec. 23, the company said it had emerged as the winner in the sweepstakes for privately-held Wilmorite Properties, which has been on the market for months.

The resulting deal whittles the dwindling pool of Class A in private hands down further while removing the risk that Macerich itself could become a takeover target.

"Overall, there's about 450 malls that are still not owned by the mall REITs," says Paul Morgan, a senior analyst and senior vice president for Friedman, Billings, Ramsey Group Inc. in Arlington, Va. The more important statistic, by his reckoning, shows only 59 strong, Class A malls remaining in private hands.

While 2004 saw its share of major acquisitions, REIT analysts believe that the volume of deals will slow in 2005 with few viable acquisition targets available. "It's going to be very difficult to keep this pace going unless we get a greater number of public company to public company mergers," he adds.

The deal activity will be with institutions, says David Shulman, a managing director at Lehman Brothers in New York. "There are portfolios held by institutions and opportunity funds. REITs may buy up the pieces held by institutions." The deal takes Macerich out of the potential target column.

Macerich sat back from much of the mall acquisition mania of the past few years. It expanded through development and targeted deals. It focused on one-off transactions. Its largest move was the acquisition of privately-held, Phoenix-based Westcor in June 2002 (which now operates as a division of Macerich).

"When you have to compare yourself against Simon and General Growth, there's a desire to get to a bigger scale so when you are speaking with retailers you have better leverage," says Robert Gadsden, portfolio manager with Alpine Woods Investments in Purchase, N.Y.. "Macerich wasn't a small company before, but the deal gives it a broader national platform which is the relevant thing."

The Wilmorite acquisition, expected to close in March 2005, will be its largest to date. The $2.3 billion deal (including the assumption of debt) will bring Macerich 11 regional malls in several northeast states. However, this deal was primarily about three malls: Tysons Corner Center in Virginia, Freehold Raceway Mall in New Jersey and Danbury Fair Mall in Connecticut. Those assets combined with Queens Center in New York, give the company a strong presence in the Northeast. Previously it was mostly West Coast-based.

"When we combine these three centers with our Queens Center in New York, these four centers by themselves makes us a very major player on the East Coast," Macerich's chief executive officer, Arthur Coppola, told analysts on a conference call after the purchase was announced.