BLOOMFIELD HILLS, Mich. and GREENWICH, Conn., June 18, 2014 /PRNewswire/ — Taubman Centers, Inc. (NYSE: TCO) and Starwood Capital Group (“Starwood”), a leading global private investment firm, today announced a definitive agreement whereby Starwood, through a controlled affiliate, has agreed to purchase a portfolio consisting of seven Taubman malls. The sale is part of Taubman’s ongoing strategy to recycle capital, maximize its NOI growth rate and create net asset value for investors over time.
“Given today’s investor interest in high quality regional malls, we have taken advantage of the opportunity to further enhance our growth and valuation, while increasing our industry leading productivity and modestly reducing the size of our base,” said Robert S. Taubman, chairman, president and chief executive officer of Taubman Centers. “As a result of these sale transactions, the company’s development and redevelopment pipeline will have an even greater impact on our growth.”
Taubman Centers currently owns, leases and/or manages 27 retail properties in 15 states and South Korea. Its portfolio of 24 owned shopping centers is the most productive in the U.S. publicly traded regional mall industry. The company reported mall tenant sales per square foot of $721 in 2013 and upon completion of these transactions, expects its mall tenant sales to increase by more than $100 per square foot. “The seven centers we are selling are strong properties that fit well within the Starwood portfolio and will continue to thrive under their management,” said Mr. Taubman.
“This acquisition is highly strategic for Starwood and its retail operating platform, Starwood Retail Partners (“SRP”),” said Barry Sternlicht, chairman & chief executive officer of Starwood Capital Group. “These assets will expand SRP’s retail portfolio to 28 properties totaling 26.8 million square feet across 15 states. The Taubman portfolio broadens our relationships with higher end department stores and in line tenants and gives us an excellent opportunity to continue to produce attractive returns for our investors.”
SRP, based in Chicago, was formed by Starwood to manage, lease and redevelop retail real estate assets across the regional mall, lifestyle and power center sectors in order to maximize property cash flow and long-term value. SRP has more than 200 employees and, through a combination of talent, experience and execution capabilities brings hands on experience in management, leasing and redevelopment to each of its investments. SRP ranks among the largest regional mall operating platforms in the United States.
The following seven malls are included in the transaction announced today:
- MacArthur Center (Norfolk, Va.)
- Stony Point Fashion Park (Richmond, Va.)
- Northlake Mall (Charlotte, N.C.)
- The Mall at Wellington Green (Wellington, Fla.)
- The Shops at Willow Bend (Plano, Tex.)
- The Mall at Partridge Creek (Clinton Township, Mich.)
- Fairlane Town Center (Dearborn, Mich.)
Consideration totaling $1.405 billion before transaction costs includes $785 million of cash and $620 million of property-level debt that will be repaid or assumed at closing by the buyer. Taubman’s share of cash and property level debt are expected to be $765 million and $595 million, respectively. The transaction, which has been approved by Taubman Centers’ Board of Directors, is subject to normal closing conditions. Taubman was represented by Eastdil Secured, LLC. Closing is expected to occur in the fourth quarter of 2014.
By late 2016, new Taubman properties are scheduled to open in Sarasota, Florida, San Juan, Puerto Rico and Honolulu, Hawaii; and three centers will debut in China and South Korea. In addition, major redevelopment projects representing an investment of about $265 million are under way at existing Taubman centers in Los Angeles, Denver, Nashville,Miami and the San Francisco Bay area.