Taubman Centers To Sell 7 Malls To Starwood Capital In $1.41 Bln Deal

(RTTNews) - Real estate investment trust Taubman Centers, Inc. (TCO) has agreed to sell a portfolio of seven malls in the U.S. to private real estate investment company Starwood Capital Group in transactions valued at $1.405 billion, the two companies said Wednesday.

The sale is part of Bloomfield Hills, Michigan-based Taubman's ongoing strategy to recycle capital, maximize its net operating income growth rate and create net asset value for investors over time.

Under the definitive agreement, Starwood Capital will buy the seven malls through a controlled affiliate. Taubman noted that the consideration of $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 expects its share of cash and property level debt to be $765 million and $595 million, respectively.

The seven malls being sold by Taubman are MacArthur Center in Norfolk, Virginia; Stony Point Fashion Park in Richmond, Virginia; Northlake Mall in Charlotte, North Carolina; The Mall at Wellington Green in Wellington, Florida; The Shops at Willow Bend in Plano, Texas; The Mall at Partridge Creek in Clinton Township, Michigan; and Fairlane Town Center in Dearborn, Michigan.

The transaction, approved by Taubman's board of directors, is expected to close in the fourth quarter of 2014.

Taubman currently owns, leases and manages 27 retail properties in 15 U.S. states and South Korea. This includes a portfolio of 24 owned shopping centers in the U.S.

Taubman reported mall tenant sales per square foot of $721 in 2013. Upon completion of the transactions, the company expects its mall tenant sales to increase by more than $100 per square foot.

Greenwich, Connecticut-based Starwood Capital was founded by industry veteran Barry Sternlicht in 1991 and has a core focus on global real estate. The company owns businesses such as Starwood Property Trust Inc. (STWD), Starwood Real Estate Securities and Starwood Energy Group.

Since the group's inception in 1991, the company has raised nearly $25 billion of equity capital and acquired over $52 billion in assets. Starwood Capital Group currently has $36 billion of assets under management.

Commenting on the acquisition, Barry Sternlicht, chairman & chief executive officer of Starwood Capital Group said, "This acquisition is highly strategic for Starwood and its retail operating platform, Starwood Retail Partners ("SRP"). These assets will expand SRP's retail portfolio to 28 properties totaling 26.8 million square feet across 15 states."

Chicago-based SRP 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.

Taubman is currently developing six properties in the U.S. and Asia totaling 5.6 million square feet. The company noted that by late 2016, new properties are scheduled to open in Sarasota, Florida, San Juan, Puerto Rico and Honolulu, Hawaii; while three centers will debut in China and South Korea.

In addition, Taubman said that 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.

TCO is currently trading at $74.47, up $0.79 or 1.07 percent on a volume of 28,701 shares.