Real Estate: Taubman Centers Sells to Simon Property Group

February 10, 2020 | Investments, News, Real Estate
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Taubman Centers (NYSE: TCO) reported financial results for the quarter and full-year periods ended December 31, 2019. It also provided a big surprise for shareholders.

For the full year, Taubman reported earnings per share of $3.32. Its 2019 earnings were primarily tied to the sales of 50% of Taubman’s interests in Starfield Hanam and CityOn.Zhengzhou, and a litigation settlement related to The Mall of San Juan, resulting in the recognition of gains totaling $3.73 per diluted common share, partially offset by impairment charges of $1.08 per diluted common share.

“We produced solid results in the fourth quarter concluding what was a very productive year for the company,” Robert S. Taubman, chairman, president and CEO of Taubman Centers said. “In 2019, we enhanced our portfolio through our partnership with Blackstone in Asia, the acquisition of The Gardens Mall in Palm Beach, and by executing on our vision for The Mall at Green Hills in Nashville, all while navigating a challenging retail environment.”

Taubman Centers Sells to Simon Property Group

The surprise was that Simon Property Group (NYSE: SPG) announced that they have entered into a definitive agreement under which Simon will acquire an 80% ownership interest in The Taubman Realty Group Limited Partnership.

Simon, through its operating partnership, Simon Property Group, will acquire all of Taubman common stock for $52.50 per share in cash, and the Taubman family will sell approximately one-third of its ownership interest at the transaction price and remain a 20% partner in TRG.

Mr. Taubman also commented on this transaction.

“Since Taubman Centers’ founding 70 years ago, we have built a portfolio of high-quality assets and continuously adapted to the evolving retail landscape,” he said in a statement. “I am proud of all that this company’s talented employees have achieved and am thrilled to have the opportunity to join together with Simon through this joint venture. Over the last few years, David and I have developed an excellent personal relationship and importantly, Simon shares our commitment to serving retailers, shoppers and the communities in which we operate.  The Board and I are confident that Simon is the ideal partner to help us build on our progress.”

I suspect we will see more mergers in the shopping center and mall Real Estate Investment Trusts this year. Overall, scale has become more important than ever as retail space becomes harder to fill due to the avalanche of e-commerce offerings competing for consumers’ dollars.

Related: REIT CBL & Associates Attracts Activist Investor

By: Tim Melvin

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