Dive Brief:

• Private investment firm Starwood Capital Group LLC has hired real estate investment bank Eastdil Secured LLC to broker the sale of malls in several U.S. cities valued at about $1.2 billion, two unnamed sources told Bloomberg.

• On the block are malls Starwood acquired from Westfield Corp. in 2013 for $1.6 billion, which include regional malls in the Chicago, San Francisco, and Cleveland areas, according to the report. The companies haven’t commented, according to Bloomberg.

• Some $47.5 billion of loans backed by malls and other retail properties are coming due in the next year and a half, just as skittishness about department store prospects, the rise of e-commerce, and the shopping-mall model are making lenders leery and re-financing difficult and more expensive, according to a recent report from Bank of America Merrill Lynch. 

Dive Insight:

Not all malls are struggling: Simon Property Group in April burnished its full-year forecast with an expectations beat, leading CEO David Simon to push back against the widely-held (and apparently well supported) notion that American malls are dying. He also dismissed the threat posed by e-commerce, saying, “the Internet is not the panacea.” 

Others aren't so sure. Tad Philipp, an analyst at Moody’s Investors Service, suggested to Bloomberg last week that e-commerce will indeed continue to take its pound of flesh. 

“For many years, people thought the retail business in the U.S. was a bit overbuilt,” Philipp told Bloomberg. “The advent of online shopping is kind of accelerating the separation of winners and losers.”

Earlier this year, Green Street Advisors suggested that department stores will have to close hundreds of additional locations in order to recapture previous levels of productivity—something that could decimate malls. And retail analyst Jan Kniffen last month told CNBC that while there are some 1,100 enclosed malls in the U.S., that number should closer to 700. “The top 250’ll do fine, and the rest of them are going to struggle,” he noted. 

Green Street found that malls anchored by Macy’s, J.C. Penney, and Sears are most vulnerable. Their troubles might be exacerbated by the closures of Macy's and Sears stores announced this year, as well as the bankruptcy of big mall tenants Areopostsale and Sports Authority and continued declining foot traffic. Many analysts predict that these woes may lead to many closures of Class C and even Class B malls, while Class A malls, home to luxury stores that bring in higher spenders, continue to do well. 

To drum up traffic, malls have been looking to create more of an experience for the shopper, diversifying their tenants and adding in gyms, movie theaters, farmers' markets, and more. Software and data companies are also coming to malls’ rescue. After lagging when it comes to technology, mall owners are now increasingly leveraging software tools to also transform it, including mapping tools to help customers find parking, tracking tools to determine traffic levels and patterns, communications with shoppers that include notices of sales or coupons, sensors that enable optimal lighting in parking lots while also saving energy, and more, according to the Wall Street Journal.

The Starwood malls for sale are Belden Village Mall in Canton, OH, Capital Mall in Olympia, WA, Franklin Park Mall in Toledo, OH, Great Northern Mall in North Olmsted, OH, Parkway Plaza in El Cajon, CA, Plaza West Covina in West Covina, CA, and Southlake Mall in Merrillville, IN, which is in the Chicagoland area.