Taubman Centers Inc. has sold the Mall at Wellington Green, along with six other retail shopping venues, to Starwood Capital Group, a global private investment firm.
The agreement was announced June 18. Starwood purchased the venues through a controlled affiliate. The sale is part of Taubman’s ongoing strategy to recycle capital, maximize its net operating income (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 among the U.S. publicly traded regional mall industry.
Taubman reported mall tenant sales per square foot of $721 in 2013, and upon completion of these transactions, expects its mall tenant sales to increase.
“The seven centers we are selling are strong properties that fit well within the Starwood portfolio and will continue to thrive under their management,” Taubman said.
Barry Sternlicht, chairman and chief executive officer of Starwood Capital Group, agreed.
“This acquisition is highly strategic for Starwood and its retail operating platform, Starwood Retail Partners,” Sternlicht said. “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 ranks among the largest regional mall operating platforms in the United States.
Aside from the Mall at Wellington Green, the following six malls were included in the transaction: MacArthur Center (Norfolk, Va.); Stony Point Fashion Park (Richmond, Va.); Northlake Mall (Charlotte, N.C.); the Shops at Willow Bend (Plano, Texas); the Mall at Partridge Creek (Clinton Township, Mich.); and 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’s board of directors, is subject to normal closing conditions. Closing is expected to occur in the fourth quarter of 2014.
By late 2016, new Taubman properties are scheduled to open in Sarasota, San Juan and Honolulu, and three centers will debut in China and South Korea. In addition, major redevelopment projects are underway at existing Taubman centers in Los Angeles, Denver, Nashville, Miami and the San Francisco Bay area.
Starwood Capital Group is a private, U.S.-based investment firm with a core focus on global real estate. Since the group’s inception in 1991, the firm 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. It has invested in nearly every class of real estate on a global basis, including office, retail, residential, senior housing, golf, hotels, resorts and industrial assets.
Starwood Capital Group and its affiliates have successfully executed an investment strategy that includes building enterprises around core real estate portfolios in both the private and public markets. More information about Starwood Capital can be found at www.starwoodcapital.com.
ABOVE: The Mall at Wellington Green will soon have a new owner.