Bloomfield Hills-based Taubman Centers Inc., a large luxury shopping mall developer, has agreed to sell 50 percent of its Taubman Asia’s interests, worth $480 million, in three Asia-based shopping centers to funds managed by The Blackstone Group in New York City.
Taubman will remain the partner responsible for the joint management of the three shopping centers, and retain the following ownership interests:
- 17.15 percent in Starfield Hanam (Hanam, South Korea)
- 17.1625 percent in CityOn.Xi’an (Xi’an, China)
- 24.5 percent in CityOn.Zhengzhou (Zhengzhou, China)
Blackstone will be making the investment through its Asia Core+ real estate investment unit, which targets substantially stabilized office, logistics, residential, and retail assets in high-quality Asian geographies and gateway cities. The transactions are subject to customary closing conditions and are expected to close throughout 2019.
“We are delighted to announce this agreement with Blackstone,” says Robert S. Taubman, chairman, president, and CEO of Taubman Centers. “It’s consistent with Taubman’s history of recycling capital for growth, once value is created from development projects. We think Blackstone will be a valuable strategic partner that can help us grow our platform in Asia.”
The recently opened assets are the dominant shopping centers in their high-growth markets and benefit from favorable supply dynamics. The Starfield Hanam shopping center already is one of the most productive retail assets in the world, according to Taubman, and the two assets in China comprise some of the highest-quality and most-productive retail offerings in their respective markets.
In addition, sales growth continues to outperform the market with sales up by double digits in 2018 across all three shopping centers.
Net cash proceeds to Taubman are expected to be about $315 million, after transaction costs and the allocation to Blackstone of its share of third-party debt.
“This transaction not only confirms the success of our platform in Asia, it increases our liquidity and strengthens our balance sheet in an earnings-accretive manner,” says Simon J. Leopold, executive vice president and CFO at Taubman.